Cisco Systems Inc (CSCO)

Analyzing the liquidity ratios of Cisco Systems Inc over the five-year period, we observe fluctuations in the current ratio, quick ratio, and cash ratio.

The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has been on a declining trend from 1.72 in 2020 to 0.91 in 2024. This indicates a potential decrease in the company's short-term liquidity position, as its current assets may not be sufficient to cover its current liabilities.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown a decreasing trend over the same period, from 1.58 in 2020 to 0.69 in 2024. This suggests a potential weakening of Cisco's ability to meet its short-term obligations without relying on inventory.

The cash ratio, which focuses solely on the company's ability to cover its current liabilities with cash and cash equivalents, has also declined from 1.16 in 2020 to 0.44 in 2024. This indicates a decreasing ability of Cisco to pay off its short-term obligations using its readily available cash reserves.

Overall, the declining trends in all three liquidity ratios suggest that Cisco Systems Inc may be facing challenges in maintaining a strong liquidity position over the period under review. It is essential for the company to carefully manage its current assets and liabilities to ensure its ability to meet its short-term financial obligations effectively.

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See also:

Cisco Systems Inc Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Cisco Systems Inc has shown varying trends over the past five years. In the latest fiscal year ended July 27, 2024, the cash conversion cycle increased to 79.47 days from 73.70 days in the previous year. This suggests that Cisco took longer to convert its investments in inventory and accounts receivable into cash during the most recent fiscal year.

Comparing to two years ago, the cash conversion cycle was higher in the fiscal year ended July 27, 2024 (79.47 days) than in the fiscal year ended July 30, 2022 (78.03 days). This indicates that Cisco took slightly longer to convert its resources into cash in the most recent year.

However, in the fiscal year ended July 27, 2024 (79.47 days), the cash conversion cycle was higher compared to the fiscal year ended July 31, 2021 (64.89 days) and July 25, 2020 (66.77 days), indicating a negative trend over the last two years in terms of the efficiency of Cisco's cash conversion cycle.

Overall, Cisco Systems Inc has experienced fluctuations in its cash conversion cycle over the past five years, with a noticeable increase in the most recent year, which may necessitate further examination of the company's working capital management practices.