Box Inc (BOX)

Box Inc's liquidity ratios have been fluctuating over the past five years.

The current ratio, which measures the ability to cover short-term obligations with current assets, has decreased from 1.43 in January 2021 to 1.19 in January 2025. This indicates that the company's current assets may be becoming less sufficient to cover its current liabilities over time.

The quick ratio, also known as the acid-test ratio, reflects the ability to meet short-term obligations with quick assets (e.g., cash, marketable securities) that can be easily converted into cash. Similarly to the current ratio, the quick ratio has also declined from 0.97 in January 2021 to 0.78 in January 2025. This suggests a decreasing ability to meet short-term obligations without relying on inventory or other less liquid assets.

The cash ratio, which is the most stringent measure of liquidity as it shows the ability to cover current liabilities with cash and cash equivalents only, has followed a similar decreasing trend from 0.97 in January 2021 to 0.78 in January 2025. This indicates a potential reduction in the company's ability to pay off its immediate obligations using just its cash on hand.

Overall, the decreasing trend in all three liquidity ratios may raise concerns about Box Inc's short-term financial health and ability to meet its obligations as they come due. It would be important for the company to closely monitor its liquidity position and take appropriate measures to improve it, such as increasing cash reserves or managing current assets more effectively.

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Additional liquidity measure

Box Inc's cash conversion cycle experienced fluctuations over the years based on the provided data. As of January 31, 2021, the cash conversion cycle was 85.19 days, which indicates that the company took over three months to convert its investments in inventory back into cash. Subsequently, there was a significant improvement as of January 31, 2022, with the cash conversion cycle dropping to 0.00 days, suggesting that Box Inc was able to efficiently manage its operating cycle, possibly by reducing the time it takes to sell inventory and collect cash from customers.

However, by January 31, 2023, the cash conversion cycle increased again to 69.43 days, indicating that the company took longer to convert investments in inventory back into cash compared to the prior year. The subsequent years, January 31, 2024, and January 31, 2025, showed a cash conversion cycle of 0.00 days, which could suggest further improvements in the company's efficiency in managing its cash resources and operational processes.

Overall, the fluctuations in Box Inc's cash conversion cycle highlight the importance of effective working capital management in optimizing cash flows and operational efficiency within the organization. The trend of reducing the cash conversion cycle is positive as it signifies shorter cash conversion periods, potentially leading to improved liquidity and financial performance.