Cognizant Technology Solutions Corp Class A (CTSH)

Liquidity ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 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
Current ratio 2.09 2.23 2.46 2.35 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
Quick ratio 1.76 1.84 2.10 2.01 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
Cash ratio 0.63 0.60 0.75 0.74 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

The liquidity ratios of Cognizant Technology Solutions Corp Class A indicate the company's ability to meet its short-term obligations and financial flexibility.

1. Current Ratio: The current ratio has displayed fluctuations over the period analyzed, ranging from a low of 1.94 to a high of 2.46. Generally, a current ratio above 1 indicates that the company has more current assets than current liabilities, with higher values suggesting a stronger ability to cover short-term obligations. Cognizant's current ratio has generally been above 2, indicating a healthy liquidity position.

2. Quick Ratio: The quick ratio, which excludes inventory from current assets, provides a more stringent measure of liquidity. Cognizant's quick ratio has shown a similar trend to the current ratio, hovering around 1.7 to 2.1. This indicates that the company has a comfortable level of liquid assets to cover its short-term liabilities, even without relying on inventory.

3. Cash Ratio: The cash ratio, which only considers cash and cash equivalents as a proportion of current liabilities, provides the most conservative measure of liquidity. Cognizant's cash ratio has ranged from 0.58 to 1.49, with the lowest values showing a slight decline in the ability to cover short-term obligations with cash alone. However, the ratio has generally been maintained at levels above 0.6, indicating a reasonable ability to meet immediate payment requirements.

In conclusion, based on the liquidity ratios analyzed, Cognizant Technology Solutions Corp Class A maintains a solid liquidity position, with the ability to cover its short-term obligations using various levels of current assets and cash reserves.

Additional liquidity measure

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 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
Cash conversion cycle days 67.70 72.38 68.66 65.89 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

The cash conversion cycle is an important metric that measures how long a company takes to convert its investments in inventory and other resources into cash flows from sales. In the case of Cognizant Technology Solutions Corp Class A, the cash conversion cycle ranged between 57.35 days to 72.38 days over the period from March 31, 2020 to December 31, 2024.

A lower cash conversion cycle indicates that the company is more efficient in managing its working capital and converting it into cash. On the other hand, a higher cash conversion cycle suggests that the company may be facing challenges in converting its investments into cash quickly.

Over the period analyzed, Cognizant Technology Solutions Corp Class A demonstrated fluctuations in its cash conversion cycle, with some quarters showing improvements while others experienced increases. For investors and stakeholders, monitoring the trend of the cash conversion cycle can provide insights into the company's liquidity management, operational efficiency, and overall financial health.