DocuSign Inc (DOCU)

The liquidity ratios of DocuSign Inc, as indicated by the data provided, have shown a declining trend over the years.

1. Current Ratio: The current ratio, which measures the company's ability to meet short-term obligations with its current assets, decreased from 1.06 in January 2021 to 0.81 in January 2025. This trend suggests that the company may potentially have difficulty in meeting its short-term liabilities with its current assets.

2. Quick Ratio: The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also declined from 1.00 in January 2021 to 0.76 in January 2025. This downward trend indicates a diminishing ability to cover immediate liabilities with liquid assets.

3. Cash Ratio: The cash ratio, which focuses solely on cash and cash equivalents compared to current liabilities, decreased from 0.71 in January 2021 to 0.53 in January 2025. This shows a reduction in the company's ability to pay off its short-term obligations solely from its cash reserves.

Overall, the decreasing trend in all three liquidity ratios indicates a potential liquidity risk for DocuSign Inc, highlighting the importance of monitoring its ability to meet short-term obligations and manage cash flow effectively.

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Additional liquidity measure

DocuSign Inc's cash conversion cycle has shown a downward trend over the past five years, indicating an improvement in the company's efficiency in managing its cash flow. The cycle decreased from 75.07 days as of January 31, 2021, to 47.61 days as of January 31, 2025. This suggests that the company is taking less time to convert its investments in inventory and accounts receivable into cash, which can be a positive sign of effective working capital management. Moreover, the decreasing trend indicates that DocuSign has been able to streamline its operations and optimize its working capital processes.