ACI Worldwide Inc (ACIW)

ACI Worldwide Inc's liquidity ratios, such as the current ratio, quick ratio, and cash ratio, provide insight into the company's ability to meet short-term financial obligations.

- The current ratio measures the company's ability to cover its short-term obligations with its current assets. ACI Worldwide Inc's current ratio has been relatively stable over the years, ranging from 1.24 to 1.50. A current ratio above 1 indicates that the company has more current assets than current liabilities, which suggests a healthy liquidity position.

- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventories from current assets. ACI Worldwide Inc's quick ratio has followed a similar trend to the current ratio, ranging from 1.24 to 1.50. This indicates that the company has a sufficient level of highly liquid assets to cover its short-term obligations.

- The cash ratio is the most conservative liquidity measure, focusing solely on the company's ability to meet short-term obligations with cash and cash equivalents. ACI Worldwide Inc's cash ratio has fluctuated slightly over the years from 0.82 to 0.92. A cash ratio above 1 is considered ideal, as it indicates the company can cover its short-term liabilities purely with cash on hand.

Overall, ACI Worldwide Inc's liquidity ratios demonstrate a consistent and healthy liquidity position over the years, with the company generally able to meet its short-term obligations comfortably. However, it's worth noting that the cash ratio has been slightly below 1 in some years, indicating that the company may be reliant on other liquid assets aside from cash to meet short-term obligations.

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Additional liquidity measure

The cash conversion cycle of ACI Worldwide Inc has varied over the past five years, indicating fluctuations in the efficiency of the company's cash management and working capital turnover. In 2023, the cash conversion cycle increased to 90.34 days from 78.48 days in 2022, reflecting a lengthening period for the company to convert its investments in inventory and receivables into cash. This could suggest potential challenges in managing inventory levels or collecting receivables in a timely manner.

Comparing to 2021 where the cash conversion cycle was 61.72 days, the increase in 2023 indicates a slowdown in cash flow efficiency. Despite this, the cash conversion cycle was higher in 2020 and 2019 at 72.52 days and 82.32 days respectively, suggesting that the company experienced better cash management in 2023 than those years.

Overall, ACI Worldwide Inc needs to focus on streamlining its inventory management and accounts receivable collection processes to reduce the cash conversion cycle and enhance its cash flow efficiency in the future.