Dayforce Inc. (DAY)

Dayforce Inc.'s liquidity ratios provide insight into its ability to meet short-term obligations. The current ratio measures the company's ability to cover current liabilities with current assets. Dayforce's current ratio has been relatively stable over the past five years, ranging from 1.07 to 1.12. This indicates that the company has been able to meet its short-term obligations, with a current ratio slightly above 1 on average.

The quick ratio, which excludes inventory from current assets, provides a more stringent measure of liquidity. Dayforce's quick ratio has also been relatively stable over the years, ranging from 0.08 to 0.42. A quick ratio below 1 suggests that the company may have difficulty meeting its immediate liabilities with its most liquid assets. While the quick ratio has shown some variability, it has generally remained low, indicating potential liquidity challenges.

The cash ratio, which is the most conservative liquidity measure, assesses the company's ability to cover current liabilities with cash and cash equivalents alone. Dayforce's cash ratio has been consistently low, ranging from 0.05 to 0.40. A cash ratio below 1 indicates that the company relies heavily on assets other than cash to meet its short-term obligations. Dayforce's cash ratio trends suggest that the company may have limited cash reserves relative to its current liabilities.

Overall, Dayforce Inc.'s liquidity ratios show a mixed picture. While the current ratio suggests that the company has generally been able to meet its short-term obligations, the quick ratio and cash ratio indicate potential liquidity challenges, particularly in terms of having enough cash on hand to cover immediate liabilities. Assessing these ratios together provides a more comprehensive view of Dayforce's liquidity position.

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Additional liquidity measure

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. Analyzing Dayforce Inc.'s cash conversion cycle over the past five years reveals significant fluctuations.

At the end of 2023, Dayforce Inc. managed to significantly improve its cash conversion cycle to 28.45 days, indicating that the company efficiently converted its inventory and other resources into sales and collected cash quickly. This represents a strong improvement compared to the previous year's cycle of 2,004.08 days, which was notably extended and inefficient.

In 2022 and 2021, Dayforce Inc. faced challenges in its cash conversion cycle, with both years showing extended cycles of 2,004.08 days and 2,035.79 days, respectively. These prolonged cycles suggest that the company had difficulties in managing its inventory levels, sales collection, or payment terms during those periods.

In 2020 and 2019, Dayforce Inc. exhibited much more efficient cash conversion cycles of 2,755.17 days and 2.66 days, respectively. The sharp contrast between these two years indicates potential volatility or changes in the company's operations, financial management, or market conditions that impacted the cash conversion efficiency.

Overall, the fluctuating trend in Dayforce Inc.'s cash conversion cycle over the past five years suggests varying levels of operational efficiency, inventory management, and cash flow dynamics. It is essential for the company to focus on maintaining a consistently low cash conversion cycle to ensure optimal financial performance and liquidity management.