Ciena Corp (CIEN)
Liquidity ratios
| Oct 28, 2023 | Oct 29, 2022 | Oct 30, 2021 | Oct 31, 2020 | Oct 31, 2017 | |
|---|---|---|---|---|---|
| Current ratio | 3.84 | 3.25 | 3.51 | 3.43 | 1.93 |
| Quick ratio | 2.31 | 2.01 | 2.76 | 2.60 | 1.50 |
| Cash ratio | 1.20 | 1.10 | 1.76 | 1.63 | 0.89 |
CIENA Corp.'s liquidity ratios have shown consistent improvement over the past five years. The current ratio, which measures the company's ability to cover short-term liabilities with short-term assets, has increased steadily from 2.82 in 2019 to 3.84 in 2023. This indicates that CIENA Corp. has a strong ability to meet its short-term obligations.
Similarly, the quick ratio, which excludes inventory from current assets, also demonstrates an upward trend from 2.41 in 2019 to 2.71 in 2023. This suggests that the company has a comfortable level of highly liquid assets to meet its short-term liabilities without relying on selling inventory.
Moreover, the cash ratio, which provides a more conservative measure of liquidity by considering only cash and cash equivalents against current liabilities, has also exhibited a positive trajectory, increasing from 1.52 in 2019 to 1.43 in 2023.
Overall, CIENA Corp.'s liquidity ratios indicate a strong financial position and the ability to manage short-term obligations effectively. This trend is a positive signal for the company's ability to navigate short-term financial challenges and pursue growth opportunities.
Additional liquidity measure
| Oct 28, 2023 | Oct 29, 2022 | Oct 30, 2021 | Oct 31, 2020 | Oct 31, 2017 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 193.00 | 170.79 | 94.55 | 86.80 | 84.23 |
To analyze CIENA Corp.'s cash conversion cycle, we compare the trend over the past five years. The cash conversion cycle measures the time it takes for a company to convert its investment in inventory and other resources into cash flows from sales.
CIENA Corp.'s cash conversion cycle has increased from 76.98 days in 2019 to 205.51 days in 2023. This indicates that the company is taking longer to convert its investment in inventory and other resources into cash.
A longer cash conversion cycle may signify inefficiencies in managing inventory, collecting receivables, or paying payables. It could also indicate that the company is experiencing challenges in generating sales or facing difficulties in managing its working capital efficiently.
It is important for CIENA Corp. to monitor and manage its cash conversion cycle effectively to ensure optimal cash flow management and working capital efficiency. This may involve improving inventory management, streamlining accounts receivable collection processes, and negotiating favorable payment terms with suppliers.