Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
RH, liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2023-04-29), 10-K (reporting date: 2023-01-28), 10-Q (reporting date: 2022-10-29), 10-Q (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-K (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-Q (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-K (reporting date: 2021-01-30), 10-Q (reporting date: 2020-10-31), 10-Q (reporting date: 2020-08-01), 10-Q (reporting date: 2020-05-02), 10-K (reporting date: 2020-02-01), 10-Q (reporting date: 2019-11-02), 10-Q (reporting date: 2019-08-03), 10-Q (reporting date: 2019-05-04), 10-K (reporting date: 2019-02-02), 10-Q (reporting date: 2018-11-03), 10-Q (reporting date: 2018-08-04), 10-Q (reporting date: 2018-05-05).
- Current Ratio
- The current ratio experienced a gradual decline from May 2018 at 1.31 to its lowest point around February 2020 at approximately 0.61. Following this decrease, there was a notable and sharp increase starting in late 2021, peaking around July 2022 at approximately 3.49. After this peak, the ratio exhibited a slight decline but remained elevated above 2.8 through to April 2023. This trend suggests an initial weakening of short-term liquidity followed by a significant strengthening in the more recent periods.
- Quick Ratio
- The quick ratio showed a consistently low trend from May 2018 until mid-2021, fluctuating mostly below 0.3 and reaching lows around 0.05 to 0.1. Starting in October 2021, there was a considerable rise, with the ratio increasing sharply to above 2.0 by early 2022. This elevated level was maintained with slight fluctuations until April 2023 when the ratio settled just under 1.9. This indicates an improvement in the company's ability to meet immediate liabilities without relying on inventory, starting in late 2021.
- Cash Ratio
- The cash ratio remained very low and relatively stable up to mid-2021, generally below 0.25 and often under 0.1, signifying limited cash or cash equivalents relative to current liabilities. A dramatic uptick began in October 2021, with the ratio exceeding 2.0 by early 2022. Similar to the quick ratio, the cash ratio saw a slight decrease after the peak but stayed above 1.7 through April 2023. This substantial increase points to a strengthened liquidity position in terms of available cash, implying a more robust capacity to cover current liabilities with liquid assets in the latest periods.
- Overall Analysis
- The period from mid-2018 to early 2020 was characterized by declining liquidity across all three ratios, indicating a weaker short-term financial position during that time. Beginning in late 2021, all liquidity ratios improved markedly, with current, quick, and cash ratios rising sharply and sustaining higher levels through early 2023. The sharp improvements suggest significant changes in the company's asset or liability structure, resulting in enhanced liquidity and a stronger ability to meet short-term obligations. Maintaining these elevated liquidity levels could indicate a strategic shift toward a more conservative or cash-rich financial stance in recent quarters.
Current Ratio
RH, current ratio calculation (quarterly data)
| Apr 29, 2023 | Jan 28, 2023 | Oct 29, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 29, 2022 | Oct 30, 2021 | Jul 31, 2021 | May 1, 2021 | Jan 30, 2021 | Oct 31, 2020 | Aug 1, 2020 | May 2, 2020 | Feb 1, 2020 | Nov 2, 2019 | Aug 3, 2019 | May 4, 2019 | Feb 2, 2019 | Nov 3, 2018 | Aug 4, 2018 | May 5, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||
| Current assets | 2,475,844) | 2,512,664) | 3,266,457) | 3,251,318) | 3,399,061) | 3,091,442) | 3,013,839) | 1,137,816) | 989,408) | 801,484) | 734,900) | 621,439) | 625,721) | 596,952) | 559,479) | 657,622) | 822,065) | 682,693) | 694,038) | 692,502) | 650,131) | |||||||
| Current liabilities | 851,503) | 885,973) | 935,176) | 958,903) | 1,361,530) | 1,063,758) | 1,096,310) | 1,229,000) | 1,016,172) | 921,632) | 882,585) | 784,980) | 968,935) | 982,912) | 903,706) | 924,957) | 1,011,610) | 918,172) | 865,073) | 836,945) | 496,496) | |||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||
| Current ratio1 | 2.91 | 2.84 | 3.49 | 3.39 | 2.50 | 2.91 | 2.75 | 0.93 | 0.97 | 0.87 | 0.83 | 0.79 | 0.65 | 0.61 | 0.62 | 0.71 | 0.81 | 0.74 | 0.80 | 0.83 | 1.31 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||
| Current Ratio, Competitors2 | ||||||||||||||||||||||||||||
| Amazon.com Inc. | 1.07 | 1.05 | 0.98 | 0.95 | 0.92 | 0.94 | 0.94 | 0.95 | 0.96 | 1.14 | 1.12 | 1.20 | 1.05 | — | — | — | — | — | — | — | — | |||||||
| Home Depot Inc. | 1.27 | 1.41 | 1.39 | 1.18 | 1.11 | 1.01 | 1.13 | 1.06 | 1.10 | 1.23 | 1.36 | 1.30 | 1.17 | — | — | — | — | — | — | — | — | |||||||
| Lowe’s Cos. Inc. | 1.25 | 1.10 | 1.20 | 1.11 | 1.17 | 1.02 | 1.19 | 1.16 | 1.17 | 1.19 | 1.38 | 1.30 | 1.20 | — | — | — | — | — | — | — | — | |||||||
| TJX Cos. Inc. | 1.20 | 1.21 | 1.16 | 1.17 | 1.25 | 1.27 | 1.29 | 1.33 | 1.52 | 1.46 | 1.41 | 1.51 | 2.20 | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2023-04-29), 10-K (reporting date: 2023-01-28), 10-Q (reporting date: 2022-10-29), 10-Q (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-K (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-Q (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-K (reporting date: 2021-01-30), 10-Q (reporting date: 2020-10-31), 10-Q (reporting date: 2020-08-01), 10-Q (reporting date: 2020-05-02), 10-K (reporting date: 2020-02-01), 10-Q (reporting date: 2019-11-02), 10-Q (reporting date: 2019-08-03), 10-Q (reporting date: 2019-05-04), 10-K (reporting date: 2019-02-02), 10-Q (reporting date: 2018-11-03), 10-Q (reporting date: 2018-08-04), 10-Q (reporting date: 2018-05-05).
1 Q1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= 2,475,844 ÷ 851,503 = 2.91
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals notable fluctuations in the company's liquidity over the observed time periods. The focus is on current assets, current liabilities, and the current ratio as key indicators of short-term financial health.
- Current Assets
- Current assets exhibited variability, beginning at approximately $650 million, with some initial decreases and increases, reaching a peak around $1.14 billion in July 2021. A significant surge occurred in October 2021, where current assets sharply increased to over $3 billion, maintaining elevated levels thereafter though with some downward adjustments. This indicates a substantial enhancement in liquid assets during the later periods.
- Current Liabilities
- Current liabilities showed a general trend of high volatility early on, starting near $496 million and rising sharply to above $1 billion by May 2019. Following this, liabilities fluctuated but generally remained below or around $1.2 billion until October 2021. Afterwards, a substantial increase was noted in some later quarters, with values hovering between $860 million and $1.36 billion, demonstrating increased short-term obligations with some variability.
- Current Ratio
- The current ratio initially declined from 1.31 to a low point around 0.61 by early 2020, suggesting decreasing liquidity and potential short-term solvency pressure. A gradual recovery phase followed, with the ratio rising towards 0.97 by mid-2021. A marked improvement occurred from October 2021 onwards, where the ratio leapt to above 2.5 and peaked near 3.5 in late 2022, consistently indicating strong liquidity and improved ability to meet current liabilities. The ratio stabilized above 2.8 in the most recent periods.
Overall, the data reveals a challenging liquidity environment initially, with current ratios below 1 for multiple quarters, implying potential short-term financial stress. The sharp increase in current assets in late 2021, combined with stabilized or moderately changing current liabilities, drove a significant improvement in the current ratio, signifying enhanced liquidity and a stronger short-term financial position in the most recent quarters. This turnaround suggests successful management of working capital or inflows of assets relative to short-term obligations.
Quick Ratio
RH, quick ratio calculation (quarterly data)
| Apr 29, 2023 | Jan 28, 2023 | Oct 29, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 29, 2022 | Oct 30, 2021 | Jul 31, 2021 | May 1, 2021 | Jan 30, 2021 | Oct 31, 2020 | Aug 1, 2020 | May 2, 2020 | Feb 1, 2020 | Nov 2, 2019 | Aug 3, 2019 | May 4, 2019 | Feb 2, 2019 | Nov 3, 2018 | Aug 4, 2018 | May 5, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||
| Cash and cash equivalents | 1,516,689) | 1,508,101) | 2,150,466) | 2,085,081) | 2,243,255) | 2,177,889) | 2,198,961) | 291,461) | 229,527) | 100,446) | 89,884) | 17,387) | 17,208) | 47,658) | 38,253) | 11,555) | 37,550) | 5,803) | 7,755) | 22,199) | 20,796) | |||||||
| Restricted cash | 3,538) | 3,662) | 3,882) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | 65,000) | —) | —) | —) | —) | |||||||
| Accounts receivable, net | 60,233) | 59,763) | 58,563) | 55,538) | 65,602) | 57,914) | 60,621) | 59,798) | 60,212) | 59,474) | 59,065) | 55,916) | 49,099) | 48,979) | 45,312) | 44,287) | 48,882) | 40,224) | 42,748) | 40,706) | 38,614) | |||||||
| Total quick assets | 1,580,460) | 1,571,526) | 2,212,911) | 2,140,619) | 2,308,857) | 2,235,803) | 2,259,582) | 351,259) | 289,739) | 159,920) | 148,949) | 73,303) | 66,307) | 96,637) | 83,565) | 55,842) | 151,432) | 46,027) | 50,503) | 62,905) | 59,410) | |||||||
| Current liabilities | 851,503) | 885,973) | 935,176) | 958,903) | 1,361,530) | 1,063,758) | 1,096,310) | 1,229,000) | 1,016,172) | 921,632) | 882,585) | 784,980) | 968,935) | 982,912) | 903,706) | 924,957) | 1,011,610) | 918,172) | 865,073) | 836,945) | 496,496) | |||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||
| Quick ratio1 | 1.86 | 1.77 | 2.37 | 2.23 | 1.70 | 2.10 | 2.06 | 0.29 | 0.29 | 0.17 | 0.17 | 0.09 | 0.07 | 0.10 | 0.09 | 0.06 | 0.15 | 0.05 | 0.06 | 0.08 | 0.12 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||
| Quick Ratio, Competitors2 | ||||||||||||||||||||||||||||
| Amazon.com Inc. | 0.56 | 0.53 | 0.44 | 0.43 | 0.44 | 0.45 | 0.42 | 0.43 | 0.48 | 0.68 | 0.64 | 0.76 | 0.63 | — | — | — | — | — | — | — | — | |||||||
| Home Depot Inc. | 0.22 | 0.26 | 0.26 | 0.18 | 0.22 | 0.20 | 0.32 | 0.30 | 0.37 | 0.47 | 0.68 | 0.69 | 0.48 | — | — | — | — | — | — | — | — | |||||||
| Lowe’s Cos. Inc. | 0.18 | 0.09 | 0.18 | 0.09 | 0.17 | 0.07 | 0.32 | 0.29 | 0.31 | 0.28 | 0.52 | 0.60 | 0.34 | — | — | — | — | — | — | — | — | |||||||
| TJX Cos. Inc. | 0.53 | 0.59 | 0.35 | 0.40 | 0.49 | 0.64 | 0.65 | 0.77 | 0.95 | 1.01 | 0.93 | 0.92 | 0.96 | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2023-04-29), 10-K (reporting date: 2023-01-28), 10-Q (reporting date: 2022-10-29), 10-Q (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-K (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-Q (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-K (reporting date: 2021-01-30), 10-Q (reporting date: 2020-10-31), 10-Q (reporting date: 2020-08-01), 10-Q (reporting date: 2020-05-02), 10-K (reporting date: 2020-02-01), 10-Q (reporting date: 2019-11-02), 10-Q (reporting date: 2019-08-03), 10-Q (reporting date: 2019-05-04), 10-K (reporting date: 2019-02-02), 10-Q (reporting date: 2018-11-03), 10-Q (reporting date: 2018-08-04), 10-Q (reporting date: 2018-05-05).
1 Q1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 1,580,460 ÷ 851,503 = 1.86
2 Click competitor name to see calculations.
- Quick Assets Trend
- The total quick assets have shown significant volatility over the analyzed periods. Initially, values fluctuated modestly around the range of approximately 46,000 to 63,000 thousand US dollars through early 2019. From mid-2019, a notable increase occurred, with the figures rising sharply and peaking at over 2.25 million thousand US dollars by early 2022. After the peak, there was some fluctuation but the quick assets generally remained above 1.5 million thousand US dollars through to April 2023, indicating a substantial increase in liquid resources compared to earlier periods.
- Current Liabilities Trend
- Current liabilities have consistently remained high relative to quick assets throughout the periods, fluctuating within the range of approximately 496,000 thousand to over 1.36 million thousand US dollars. The values generally trended upwards until early 2022, with a peak around 1.36 million thousand US dollars in April 2022. Following this, there was a gradual decline, reducing to approximately 851,503 thousand US dollars by April 2023. This decrease in liabilities coupled with high quick assets could indicate an improving liquidity position in the most recent quarters.
- Quick Ratio Analysis
- The quick ratio, representing the company's short-term liquidity, displayed a low and relatively stable range between 0.05 and 0.17 from May 2018 to October 2020, indicating limited quick assets relative to current liabilities. From late 2020, a marked improvement occurred, with the ratio rising substantially and peaking above 2.3 times by late 2022. This indicates a strong liquidity buffer, with quick assets exceeding current liabilities by more than double during this period. Although slight declines occurred after the peak, the quick ratio remained significantly higher than early periods, maintaining around 1.8 by April 2023.
- Summary Insights
- The data presents a clear transformation in liquidity profile, transitioning from a constrained liquidity environment through 2018–2020 to a robust position post-2020. The rapid accumulation of quick assets coupled with relatively stable or declining current liabilities has driven substantial enhancement in the quick ratio. This suggests improvements in the company's ability to meet short-term obligations without relying on inventory sales. The trends may reflect strategic financial management or operational changes that bolster liquid asset reserves.
Cash Ratio
RH, cash ratio calculation (quarterly data)
| Apr 29, 2023 | Jan 28, 2023 | Oct 29, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 29, 2022 | Oct 30, 2021 | Jul 31, 2021 | May 1, 2021 | Jan 30, 2021 | Oct 31, 2020 | Aug 1, 2020 | May 2, 2020 | Feb 1, 2020 | Nov 2, 2019 | Aug 3, 2019 | May 4, 2019 | Feb 2, 2019 | Nov 3, 2018 | Aug 4, 2018 | May 5, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||
| Cash and cash equivalents | 1,516,689) | 1,508,101) | 2,150,466) | 2,085,081) | 2,243,255) | 2,177,889) | 2,198,961) | 291,461) | 229,527) | 100,446) | 89,884) | 17,387) | 17,208) | 47,658) | 38,253) | 11,555) | 37,550) | 5,803) | 7,755) | 22,199) | 20,796) | |||||||
| Restricted cash | 3,538) | 3,662) | 3,882) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | 65,000) | —) | —) | —) | —) | |||||||
| Total cash assets | 1,520,227) | 1,511,763) | 2,154,348) | 2,085,081) | 2,243,255) | 2,177,889) | 2,198,961) | 291,461) | 229,527) | 100,446) | 89,884) | 17,387) | 17,208) | 47,658) | 38,253) | 11,555) | 102,550) | 5,803) | 7,755) | 22,199) | 20,796) | |||||||
| Current liabilities | 851,503) | 885,973) | 935,176) | 958,903) | 1,361,530) | 1,063,758) | 1,096,310) | 1,229,000) | 1,016,172) | 921,632) | 882,585) | 784,980) | 968,935) | 982,912) | 903,706) | 924,957) | 1,011,610) | 918,172) | 865,073) | 836,945) | 496,496) | |||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||
| Cash ratio1 | 1.79 | 1.71 | 2.30 | 2.17 | 1.65 | 2.05 | 2.01 | 0.24 | 0.23 | 0.11 | 0.10 | 0.02 | 0.02 | 0.05 | 0.04 | 0.01 | 0.10 | 0.01 | 0.01 | 0.03 | 0.04 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||
| Cash Ratio, Competitors2 | ||||||||||||||||||||||||||||
| Amazon.com Inc. | 0.56 | 0.53 | 0.44 | 0.43 | 0.44 | 0.45 | 0.42 | 0.43 | 0.48 | 0.68 | 0.64 | 0.76 | 0.63 | — | — | — | — | — | — | — | — | |||||||
| Home Depot Inc. | 0.05 | 0.12 | 0.10 | 0.05 | 0.09 | 0.08 | 0.19 | 0.17 | 0.24 | 0.34 | 0.58 | 0.58 | 0.37 | — | — | — | — | — | — | — | — | |||||||
| Lowe’s Cos. Inc. | 0.18 | 0.09 | 0.18 | 0.09 | 0.17 | 0.07 | 0.32 | 0.29 | 0.31 | 0.28 | 0.52 | 0.60 | 0.34 | — | — | — | — | — | — | — | — | |||||||
| TJX Cos. Inc. | 0.48 | 0.53 | 0.30 | 0.35 | 0.43 | 0.59 | 0.60 | 0.71 | 0.89 | 0.97 | 0.90 | 0.87 | 0.92 | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2023-04-29), 10-K (reporting date: 2023-01-28), 10-Q (reporting date: 2022-10-29), 10-Q (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-K (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-Q (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-K (reporting date: 2021-01-30), 10-Q (reporting date: 2020-10-31), 10-Q (reporting date: 2020-08-01), 10-Q (reporting date: 2020-05-02), 10-K (reporting date: 2020-02-01), 10-Q (reporting date: 2019-11-02), 10-Q (reporting date: 2019-08-03), 10-Q (reporting date: 2019-05-04), 10-K (reporting date: 2019-02-02), 10-Q (reporting date: 2018-11-03), 10-Q (reporting date: 2018-08-04), 10-Q (reporting date: 2018-05-05).
1 Q1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 1,520,227 ÷ 851,503 = 1.79
2 Click competitor name to see calculations.
- Cash Assets Trend
- The total cash assets exhibited considerable volatility throughout the periods. Initially, cash assets remained relatively low, fluctuating in the single-digit thousands through early 2020, with occasional spikes, such as in May 2019. Beginning in early 2021, there was a pronounced and sustained increase, peaking dramatically in October 2021 at more than two million US dollars in thousands. This high level of cash assets was maintained, albeit with minor fluctuations, through early 2023.
- Current Liabilities Trend
- Current liabilities generally remained high across all periods, typically in the range of approximately 0.5 to 1.4 million US dollars in thousands. There was a gradual upward trend peaking around mid-2022, followed by a moderate decline in liabilities towards early 2023. Despite fluctuations, liabilities did not show the extreme variability seen in cash assets and maintained a more consistent level compared to cash holdings.
- Cash Ratio Analysis
- The cash ratio demonstrated significant variation correlating with changes in cash assets. For the majority of the periods before 2021, the cash ratio was notably low, often around or below 0.1, indicating limited liquidity coverage of current liabilities. Beginning in mid-2021, the ratio increased sharply, reaching values above 2.0, reflecting strong liquidity and cash holdings exceeding current liabilities by a substantial margin. This elevated liquidity condition persisted with values generally above 1.5 through early 2023, suggesting the company had considerable short-term financial flexibility during this time.
- Overall Insights
- The financial data indicates a shift from constrained liquidity positions prior to 2021 towards a significantly improved cash liquidity status starting mid-2021. The large increase in cash assets and the corresponding rise in the cash ratio might suggest strategic changes such as capital raises, asset sales, or operational improvements. Meanwhile, current liabilities experienced relatively moderate increases and subsequent declines but remained substantial throughout. The heightened cash ratio in recent periods strongly implies an enhanced ability to cover short-term obligations, reducing liquidity risk materially compared to previous years.