Victoria's Secret & Co (VSCO)

Victoria's Secret & Co's liquidity ratios, specifically the current, quick, and cash ratios, provide insights into the company's ability to meet short-term obligations and its liquidity position over time.

The current ratio indicates the company's ability to cover its short-term liabilities with its current assets. From January 31, 2022, at 1.00, the ratio improved to 1.28 on October 31, 2022, indicating a stronger ability to meet short-term obligations. However, there was a sharp decline to 0.95 by January 31, 2024, suggesting potential challenges in managing short-term commitments. The ratio recovered to 1.17 by October 31, 2024, but significantly dropped to 0.12 by January 31, 2025, indicating potential liquidity issues.

The quick ratio, a more stringent measure of liquidity, considers only the most liquid assets to cover current liabilities. The trend for Victoria's Secret & Co shows fluctuations, with some periods reflecting challenges in meeting short-term obligations. For instance, the quick ratio was particularly low on October 31, 2022, at 0.09, but improved to 0.26 by February 3, 2024. However, by January 31, 2025, the quick ratio fell back to 0.12, indicating a limited ability to cover immediate obligations with liquid assets.

The cash ratio provides insights into the company's ability to cover current liabilities with cash and cash equivalents alone. The ratios reflect a similar pattern to the quick ratio, with fluctuations over time. Victoria's Secret & Co's ability to cover obligations with cash has shown variations, with the ratio reaching its lowest point at 0.07 on April 30, 2024.

Overall, the analysis of Victoria's Secret & Co's liquidity ratios suggests periods of strength in liquidity position but also highlights potential challenges in meeting short-term obligations, particularly in certain periods. Monitoring these ratios is crucial for assessing the company's financial health and ability to manage liquidity effectively.

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Additional liquidity measure

Victoria's Secret & Co's cash conversion cycle, a key measure of efficiency in managing cash flow, has fluctuated over the reported periods. The cycle represents the time it takes for the company to convert its investments in inventory and accounts receivable back into cash.

Analyzing the data provided, we observe that the cash conversion cycle ranged from a low of 41.10 days on February 3, 2024, to a high of 112.31 days on January 31, 2023. Generally, a shorter cash conversion cycle indicates better efficiency in managing working capital.

The company saw a significant improvement in efficiency towards mid-2023, with the cycle decreasing to 45.64 days on July 29, 2023. However, it rose to 106.02 days by April 30, 2023, indicating potential issues in managing inventory and receivables during that period.

Overall, Victoria's Secret & Co's cash conversion cycle exhibits variability over the reported periods, which may signify challenges or improvements in working capital management. Further analysis and comparison with industry benchmarks can provide more insights into the company's efficiency in this aspect.