Cisco Systems Inc (CSCO)

Quick ratio

		Jul 27, 2024	Jul 29, 2023	Jul 30, 2022	Jul 31, 2021	Jul 25, 2020
Cash	US$ in thousands	7,508,000	10,123,000	7,079,000	9,175,000	11,809,000
Short-term investments	US$ in thousands	10,346,000	16,023,000	12,188,000	15,343,000	17,610,000
Receivables	US$ in thousands	10,023,000	9,252,000	10,505,000	10,146,000	10,523,000
Total current liabilities	US$ in thousands	40,584,000	31,309,000	25,640,000	26,257,000	25,331,000
Quick ratio		0.69	1.13	1.16	1.32	1.58

July 27, 2024 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($7,508,000K + $10,346,000K + $10,023,000K) ÷ $40,584,000K
= 0.69

The quick ratio, also known as the acid-test ratio, reflects Cisco Systems Inc's ability to meet its short-term obligations using its most liquid assets. The quick ratio is calculated by dividing quick assets (current assets excluding inventory) by current liabilities.

Looking at the trend over the past five years, Cisco's quick ratio has been declining. In July 2020, the quick ratio stood at 1.58, indicating that the company had $1.58 of quick assets available to cover each $1 of current liabilities. Over the subsequent years, the quick ratio has decreased to 1.32 in July 2021, 1.16 in July 2022, and further down to 1.13 in July 2023. Finally, in July 2024, the quick ratio dropped to 0.69.

A quick ratio of 0.69 suggests that Cisco's quick assets may not be sufficient to cover its current liabilities adequately. This declining trend could indicate potential liquidity issues for the company as its ability to meet short-term obligations with its liquid assets has weakened over the years.

It would be crucial for Cisco Systems Inc to closely monitor its liquidity position and take appropriate measures to improve its quick ratio to ensure it can meet its short-term obligations comfortably.