Dayforce Inc. (DAY)

Dayforce Inc.'s liquidity ratios provide insight into the company's ability to meet its short-term financial obligations.

1. Current Ratio: This ratio indicates Dayforce Inc.'s ability to cover its short-term liabilities with its current assets. The trend shows fluctuations over the years but generally stays above 1, which means the company has sufficient current assets to cover its current liabilities. As of December 31, 2024, the current ratio significantly increased to 3.38, which could suggest an improved liquidity position. However, such a high ratio may also indicate an inefficient use of assets.

2. Quick Ratio: The quick ratio measures Dayforce Inc.'s ability to meet its short-term obligations without relying on the sale of inventory. The ratio is relatively low in the earlier periods, indicating a potential reliance on inventory to meet short-term obligations. However, the ratio shows some improvement over time, with a significant increase to 1.99 on December 31, 2024. This could signal a stronger ability to meet short-term liabilities without relying on inventory liquidity.

3. Cash Ratio: The cash ratio is the most stringent liquidity measure, representing the firm's ability to cover its current liabilities with cash and cash equivalents. The cash ratio follows a similar trend as the quick ratio, with fluctuations over the years but a significant increase to 1.99 on December 31, 2024. This increase indicates a higher proportion of cash and cash equivalents relative to current liabilities, improving the company's ability to meet short-term obligations.

Overall, the analysis of Dayforce Inc.'s liquidity ratios suggests an improvement in its short-term liquidity position over the years, with the company showing better ability to cover its short-term liabilities with various levels of liquidity, including current assets, quick assets, and cash.

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Additional liquidity measure

The cash conversion cycle is a measure of how efficiently a company manages its working capital to generate cash flow. For Dayforce Inc., the cash conversion cycle has varied over the past few years.

From March 31, 2020, to December 31, 2021, the company's cash conversion cycle fluctuated significantly, ranging from as low as 1,979.93 days to as high as 3,268.72 days. A lower number indicates that the company is able to convert its resources into cash more quickly, while a higher number suggests that it takes longer for the company to receive cash from its operations.

It is worth noting that, as of March 31, 2022, June 30, 2022, and September 30, 2022, the company reported a cash conversion cycle of 0.00 days, indicating potentially exceptional efficiency in managing its working capital during those periods.

Looking ahead, from March 31, 2023, to December 31, 2024, the cash conversion cycle remained relatively stable, oscillating within a narrower range compared to the prior years. This suggests that Dayforce Inc. may have implemented more consistent working capital management practices during this period.

Overall, analyzing the cash conversion cycle can provide valuable insights into Dayforce Inc.'s operational efficiency and effectiveness in managing its cash flow. Further evaluation into the specific factors influencing these fluctuations could offer a deeper understanding of the company's financial performance and potential areas for improvement.