Bill Com Holdings Inc (BILL)

The liquidity position of Bill Com Holdings Inc. over the analyzed period demonstrates variability across different metrics.

Current Ratio:
The current ratio fluctuated between a low of approximately 1.39 at the end of December 2021 and a high of 1.92 in the first quarter of 2023. Overall, the ratio remained above 1 throughout the period, indicating that current assets generally exceeded current liabilities. The trend shows a gradual increase from September 2020 (1.41) through the first half of 2021, peaking in early 2023, before experiencing a slight decline toward the latter part of 2024 and into mid-2025. The ratio's proximity to 1 suggests a comfortably manageable short-term liquidity, with no immediate liquidity concerns.

Quick Ratio:
The quick ratio, which excludes inventory from current assets, ranged from a low of approximately 0.42 in September 2020 to a high of 0.94 in March 2023. This indicates that, at its peak, the company's liquid assets (excluding inventory) nearly covered current liabilities. The trend depicts significant improvement from September 2020 (0.42) to March 2023, after which the ratio declined slightly, settling around 0.66 in mid-2025. Despite fluctuations, the quick ratio remained below 1 in most instances, signifying that the company's most liquid assets did not always fully cover immediate liabilities.

Cash Ratio:
The cash ratio, representing the most conservative liquidity measure, showed a similar pattern. It started at approximately 0.41 at the end of September 2020 and increased to about 0.88 in March 2021. It peaked at around 0.80 in the first quarter of 2023 and then declined throughout 2024, reaching roughly 0.36 by September 2024. The cash ratio remained below 1 at all times, reflecting a reliance on other current assets beyond cash to meet short-term obligations.

Overall Assessment:
Across all three measurements, Bill Com Holdings Inc. exhibits a generally stable liquidity profile with ratios above the critical threshold of 1 in the current ratio, indicating an adequate capacity to cover short-term liabilities. The increasing trend in the current and quick ratios during 2021 and early 2023 suggests periods of improved liquidity confidence, while subsequent declines indicate some easing of liquidity levels. Nonetheless, the ratios' consistent positioning below or near 1 in the quick and cash measures signals that liquidity is somewhat conservative, and reliance on liquid assets is moderate. Finally, the gradual fluctuations across these ratios point to a stable but cautious liquidity stance, with no immediate signs of liquidity distress.

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Additional liquidity measure

The cash conversion cycle (CCC) of Bill Com Holdings Inc. exhibits substantial variability over the analyzed periods, reflecting significant fluctuations in the company's working capital management. Initially, as of September 30, 2020, the CCC was negative at -31.02 days, indicating that the company was able to collect cash from sales before paying its suppliers, a favorable position suggesting efficient working capital management or a rapid cash cycle.

Between September 2020 and December 2020, the CCC improved, moving closer to zero and reaching -11.38 days, with the negative value indicating continued favorable cash flow timing. By March 31, 2021, the CCC was nearly balanced at +0.96 days, suggesting a slight shift towards longer operational cycles but still maintaining a relatively efficient cash conversion process.

However, the cycle experienced a dramatic deterioration starting in the June 30, 2021 quarter, when it surged to 182.95 days. This sharp increase persisted into the subsequent periods, with the CCC remaining elevated at around 180 days during September 2021 and December 2021, before gradually declining over the following periods. Notably, during December 2022, the CCC reached an anomalously high value of 7,460.05 days, which likely indicates a reporting error, data anomaly, or extraordinary operational circumstances, as such a duration exceeds typical industry ranges by several orders of magnitude.

Following this anomaly, the CCC showed signs of normalization, decreasing substantially in the first quarter of 2024 to 186.82 days, and briefly declining further in subsequent periods (e.g., 153.16 days in December 2024). Nonetheless, the values remained substantially elevated compared to initial periods, indicating prolonged cycles for cash conversion, possibly due to extended receivables or inventory management issues.

In summary, the company's cash conversion cycle has experienced large fluctuations, with episodes of both negative and extraordinarily high positive values. The data suggests periods of highly efficient cash flow management, punctuated by significant disruptions or anomalies, with recent periods indicating a relatively prolonged cycle compared to early periods. Such dynamics warrant further investigation into operational and financial practices during the periods of abnormality to identify underlying causes and assess underlying working capital efficiency.