Accenture plc (ACN)

The liquidity ratios of Accenture plc over the past five years reflect variations in the company's ability to meet its short-term financial obligations with its current assets.

1. Current Ratio:
The current ratio measures the ability of a company to pay its short-term liabilities with its current assets. Accenture's current ratio has experienced a downward trend from 1.40 in 2020 to 1.10 in 2024. This indicates that the company's short-term liquidity position has weakened over the years, as it now has fewer current assets available to cover its current liabilities.

2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Accenture's quick ratio has followed a similar downward trend, declining from 1.24 in 2020 to 0.89 in 2024. This suggests that the company's ability to quickly cover its short-term obligations with its most liquid assets, excluding inventory, has deteriorated.

3. Cash Ratio:
The cash ratio is the most conservative liquidity measure, focusing solely on the ability of a company to pay off its current liabilities using its cash and cash equivalents. Accenture's cash ratio has also declined over the years, from 0.67 in 2020 to 0.26 in 2024, indicating a decreasing ability to settle short-term obligations with readily available cash.

Overall, the downward trends in the current, quick, and cash ratios signify a potential strain on Accenture's short-term liquidity position over the past five years. It is important for investors and stakeholders to monitor these ratios closely to assess the company's ability to meet its immediate financial obligations effectively.

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See also:

Accenture plc Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Accenture plc has shown a slight increase over the past five years, reflecting a trend towards a longer period of time for the company to convert its investments in inventory and accounts receivable into cash. The cycle stood at 48.85 days as of August 31, 2024, compared to 44.56 days in the previous year and 42.99 days in August 31, 2020. This indicates that the company may be taking longer to sell its products or collect payment from customers. A longer cash conversion cycle can tie up working capital and may signal inefficiencies in inventory management or accounts receivable collection processes. Accenture plc should monitor and potentially improve its cash conversion cycle to ensure optimal cash flow management.