Salesforce.com Inc (CRM)

The liquidity ratios for Salesforce Inc indicate the company's ability to meet its short-term obligations.

1. Current Ratio:
- The current ratio measures the company's ability to pay its short-term obligations using its current assets.
- Salesforce's current ratio has varied over the past five years, with a range from 1.02 to 1.23.
- A current ratio above 1 indicates that the company has more current assets than current liabilities, which is generally considered a good sign.
- However, the decreasing trend in the current ratio from 2021 to 2023 suggests a potential weakening liquidity position.

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.
- Salesforce's quick ratio mirrors its current ratio, ranging from 1.02 to 1.23 over the same period.
- The consistency between the current ratio and quick ratio indicates that the company's liquidity is not significantly dependent on inventory.

3. Cash Ratio:
- The cash ratio specifically measures the company's ability to cover its short-term obligations with cash and cash equivalents.
- Salesforce's cash ratio has fluctuated between 0.60 and 0.80 in the past five years.
- A cash ratio below 1 means that the company may not be able to fully cover its short-term liabilities with cash on hand alone.
- The decreasing trend in the cash ratio from 2020 to 2023 could indicate a reduction in available cash relative to short-term obligations.

In summary, while Salesforce Inc generally maintains liquidity levels above the industry-average benchmark of 1, the decreasing trend in both the current ratio and cash ratio suggests a potential liquidity challenge. It is essential for investors and stakeholders to monitor these trends closely to assess the company's ability to meet its short-term obligations in the future.

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See also:

Salesforce.com Inc Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Salesforce Inc has shown a fluctuating trend over the past five years. In the most recent fiscal year ending on January 31, 2024, the company's cash conversion cycle was 119.52 days, indicating an improvement compared to the previous year's figure of 125.21 days.

However, it is noteworthy that the cycle had increased in the two preceding years, reaching 134.18 days in January 31, 2022, and 133.72 days in January 31, 2021. This suggests that Salesforce has been able to manage its working capital more efficiently in the short term, converting its resources into cash faster in the most recent period.

Overall, the company's cash conversion cycle has displayed variability, possibly due to changes in the company's operating efficiency, accounts receivables, and inventory management practices. Salesforce may benefit from further analyzing the components of the cycle to identify areas where improvements can be made to optimize its cash conversion process.