Box Inc (BOX)

In analyzing Box Inc's liquidity ratios over the past five years, several key observations can be made:

1. Current Ratio: The current ratio measures a company's ability to cover its short-term liabilities with its short-term assets. Box Inc's current ratio has varied over the past five years, ranging from 0.79 in January 2020 to 1.43 in January 2021. The current ratio has generally fluctuated within a reasonable range, indicating that the company has been able to meet its short-term obligations with its current assets.

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. Box Inc's quick ratio has followed a similar trend to the current ratio, ranging from 0.74 in January 2020 to 1.34 in January 2021. The company has generally maintained a healthy quick ratio, suggesting that it has sufficient liquid assets to cover its short-term liabilities.

3. Cash Ratio: The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. Box Inc's cash ratio has also shown variability over the past five years, ranging from 0.37 in January 2020 to 0.97 in January 2021. While the cash ratio has at times been relatively low, indicating a lower level of cash reserves, the overall trend suggests that Box Inc has maintained an adequate level of cash to meet its short-term obligations.

Overall, Box Inc's liquidity ratios demonstrate a mixed but generally stable liquidity position over the past five years. The company has shown the ability to meet its short-term obligations with its current and liquid assets, although fluctuations in the ratios indicate the need for continued monitoring of liquidity management.

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Additional liquidity measure

The cash conversion cycle of Box Inc has exhibited fluctuations over the past five years. In the most recent fiscal year, ending on January 31, 2024, the company's cash conversion cycle stood at 98.73 days, showing an improvement compared to the previous year. This indicates that Box Inc was able to more efficiently convert its investments in inventory and accounts receivable into cash during this period.

In comparison to the prior years, the cash conversion cycle was higher in the fiscal years ending in 2021 and 2023, at 133.35 days and 119.67 days, respectively. This suggests that Box Inc took longer to convert its investments into cash during those periods, potentially facing challenges in managing inventory levels and collecting receivables.

On the other hand, the cash conversion cycle was relatively lower in the fiscal years ending in 2020 and 2022, at 125.51 days and 106.61 days, respectively. This indicates that Box Inc was more efficient in managing its working capital during those years, resulting in a quicker conversion of assets into cash.

Overall, the trend in Box Inc's cash conversion cycle indicates fluctuations in the efficiency of the company's working capital management over the past five years, with the most recent year showing improved performance in this aspect.