Cognizant Technology Solutions Corp Class A (CTSH)

Liquidity ratios

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Current ratio 2.25 2.23 2.27 2.18 2.17 2.27 2.23 2.22 2.08 2.11 2.03 2.09 1.94 2.61 2.66 2.90 2.55 2.53 2.55 2.90
Quick ratio 1.95 1.94 1.91 1.87 1.88 1.99 1.94 1.88 1.78 1.78 1.66 1.71 1.64 2.33 2.43 2.61 2.24 2.23 2.26 2.59
Cash ratio 0.79 0.74 0.69 0.75 0.75 0.85 0.74 0.73 0.77 0.73 0.58 0.69 0.77 1.39 1.43 1.49 1.15 1.05 1.06 1.35

The liquidity ratios of Cognizant Technology Solutions Corp., as indicated by the current ratio, quick ratio, and cash ratio, demonstrate the company's ability to meet its short-term obligations effectively.

The current ratio has remained relatively stable over the quarters, ranging between 2.17 and 2.27. This suggests that the company has consistently maintained more than double the current assets to cover its current liabilities. A current ratio above 1 indicates that the company has enough liquid assets to cover its short-term obligations.

Similarly, the quick ratio, which excludes inventory from current assets, also reflects a strong liquidity position for Cognizant Technology Solutions Corp. with values consistently around the same level as the current ratio. This implies that the company can quickly meet its short-term obligations using its most liquid assets.

The cash ratio, which focuses solely on cash and cash equivalents compared to current liabilities, has also shown stability over the quarters. It indicates that the company holds sufficient cash to cover its immediate liabilities, albeit at a slightly lower level compared to current and quick ratios.

Overall, the liquidity ratios of Cognizant Technology Solutions Corp. paint a picture of a company with robust liquidity position, capable of meeting its short-term financial obligations comfortably across the reported quarters.

Additional liquidity measure

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Cash conversion cycle days 65.21 64.43 63.69 62.54 63.33 61.28 63.77 61.66 61.75 63.17 63.11 61.39 57.90 57.35 60.71 62.10 63.15 64.90 59.05 45.52

To analyze Cognizant Technology Solutions Corp.'s cash conversion cycle over the indicated quarters, we observe a general fluctuation in the cash conversion cycle duration. The cash conversion cycle measures the time taken for a company to convert its investments in inventory and other resources into cash inflows from sales.

Looking at the data provided, we see a slight upward trend in the cash conversion cycle duration from Q1 2022 to Q4 2023, indicating a potential delay in the company's cash conversion process. In Q4 2023, the cash conversion cycle reached 62.88 days, which is higher than in the previous quarter.

While the company managed to lower the cash conversion cycle duration in Q2 2022 and Q3 2022 compared to Q1 2022, from Q3 2022 to Q4 2023, it appears to have reversed this positive trend. This variation may reflect changes in inventory management, sales efficiency, or payment collection processes within the company.

Overall, an increasing cash conversion cycle could suggest a need for improved working capital management practices by Cognizant Technology Solutions Corp. to enhance cash flow efficiency and optimize its liquidity position. By closely monitoring and addressing factors influencing the cash conversion cycle, the company can potentially streamline operations and enhance financial performance.