Williams-Sonoma Inc (WSM)

Liquidity ratios

Jan 31, 2025 Oct 31, 2024 Jul 31, 2024 Apr 30, 2024 Jan 31, 2024 Jan 28, 2024 Oct 31, 2023 Oct 29, 2023 Jul 31, 2023 Jul 30, 2023 Apr 30, 2023 Jan 31, 2023 Jan 29, 2023 Oct 31, 2022 Oct 30, 2022 Jul 31, 2022 May 1, 2022 Apr 30, 2022 Jan 31, 2022 Jan 30, 2022
Current ratio 1.44 1.35 1.56 1.55 1.45 1.45 1.31 1.31 1.22 1.22 1.12 1.24 1.24 1.11 1.11 1.06 1.11 1.11 1.31 1.31
Quick ratio 0.63 0.45 0.72 0.73 0.67 0.74 0.39 0.46 0.31 0.38 0.17 0.22 0.30 0.06 0.13 0.07 0.26 0.19 0.48 0.55
Cash ratio 0.63 0.45 0.72 0.73 0.67 0.67 0.39 0.39 0.31 0.31 0.17 0.22 0.22 0.06 0.06 0.07 0.19 0.19 0.48 0.48

Williams-Sonoma Inc's liquidity ratios, namely the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations and manage its liquidity effectively.

The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, has shown some fluctuations over the analyzed period. It started at 1.31 in January 2022, dipped to 1.06 by July 2022, and then improved to 1.44 by January 2025. Generally, a current ratio above 1 indicates that the company has more current assets than current liabilities to fulfill its obligations.

The quick ratio, or acid-test ratio, gives a more stringent assessment of liquidity by excluding inventory from current assets. Williams-Sonoma's quick ratio started relatively low at 0.55 in January 2022, reached a low of 0.06 in October 2022, and recovered to 0.63 by January 2025. A quick ratio below 1 suggests that the company may struggle to meet its short-term obligations without relying on inventory sales.

Lastly, the cash ratio, which is the most conservative liquidity measure, assesses a company's ability to cover its current liabilities using only cash and cash equivalents. Williams-Sonoma's cash ratio also demonstrated fluctuations, with values ranging from 0.06 to 0.73 over the period. A higher cash ratio indicates a stronger ability to pay off short-term liabilities without relying on other current assets.

Overall, while Williams-Sonoma has experienced fluctuations in its liquidity ratios over time, the company has generally maintained a current ratio above 1, ensuring it can meet its short-term obligations. However, the lower quick and cash ratios at certain points indicate a potential dependency on inventory and other current assets to fulfill immediate payment needs. Investors and stakeholders should continue to monitor these liquidity measures to assess the company's short-term financial health.


See also:

Williams-Sonoma Inc Liquidity Ratios (Quarterly Data)


Additional liquidity measure

Jan 31, 2025 Oct 31, 2024 Jul 31, 2024 Apr 30, 2024 Jan 31, 2024 Jan 28, 2024 Oct 31, 2023 Oct 29, 2023 Jul 31, 2023 Jul 30, 2023 Apr 30, 2023 Jan 31, 2023 Jan 29, 2023 Oct 31, 2022 Oct 30, 2022 Jul 31, 2022 May 1, 2022 Apr 30, 2022 Jan 31, 2022 Jan 30, 2022
Cash conversion cycle days 119.34 132.03 125.01 119.83 135.27 77.69 162.80 88.96 115.39 77.42 117.79 138.64 100.82 172.73 111.11 135.59 82.71 121.59 124.17 74.18

The cash conversion cycle of Williams-Sonoma Inc has shown fluctuations over the reported periods. It helps measure the efficiency of the company's cash management in converting its resource inputs into cash flows from sales.

In general, a shorter cash conversion cycle indicates better liquidity and efficiency in managing working capital. From the data provided, we observe that the cash conversion cycle fluctuated between a low of 74.18 days on January 30, 2022, and a high of 172.73 days on October 31, 2022.

A shorter cycle means the company is able to collect cash from its receivables, sell its inventory, and pay its suppliers more quickly. Conversely, a longer cycle may suggest inefficiencies in managing working capital, which could lead to increased carrying costs and liquidity challenges.

It is crucial for Williams-Sonoma Inc to monitor and manage its cash conversion cycle effectively to ensure optimal cash flow management, working capital efficiency, and overall financial health. By implementing strategies to streamline processes related to accounts receivable, inventory turnover, and accounts payable, the company can potentially improve its cash conversion cycle and strengthen its financial position in the long run.