DXC Technology Co (DXC)

The liquidity ratios of DXC Technology Co over the past five years indicate the company's ability to meet its short-term financial obligations.

1. Current Ratio:
- The current ratio has remained relatively stable over the years, ranging from 1.01 in 2021 to 1.18 in 2023.
- A current ratio above 1 suggests that the company has sufficient current assets to cover its current liabilities.
- DXC Technology Co generally maintained a current ratio above 1, indicating a healthy liquidity position.

2. Quick Ratio:
- The quick ratio has also shown consistency over the years, with values around 1.02 in 2023 and 2024.
- The quick ratio excludes inventory from current assets, providing a more immediate liquidity assessment.
- These ratios suggest that the company has a stable ability to meet short-term obligations without relying heavily on inventory.

3. Cash Ratio:
- The cash ratio decreased from 0.47 in 2020 to 0.28 in 2024.
- A cash ratio below 1 indicates that the company may not have sufficient liquid cash to cover its current liabilities.
- The declining trend in the cash ratio raises a concern about the company's immediate liquidity position and its ability to meet obligations solely from cash.

In conclusion, DXC Technology Co has maintained a relatively stable current and quick ratio over the years, indicating a healthy liquidity position. However, the decreasing trend in the cash ratio warrants attention as it may indicate a potential liquidity risk in meeting immediate obligations solely from cash reserves.

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Additional liquidity measure

The cash conversion cycle of DXC Technology Co has shown fluctuating trends over the past five years. In the most recent fiscal year ending March 31, 2024, the company's cash conversion cycle improved to 63.52 days from 82.08 days in the previous year, indicating a more efficient management of working capital. This improvement suggests that the company was able to convert its inventories to sales and ultimately into cash more rapidly.

Comparing the data to previous years, we observe that in the fiscal year 2021 and 2022, the cash conversion cycle remained relatively stable at around 82 days, indicating consistency in the company's working capital management. However, there was a notable decrease in the cycle in the fiscal year 2020 to 68.31 days, which may have been due to more efficient inventory turnover or quicker collection of receivables.

Overall, the decreasing trend in the cash conversion cycle in the most recent year is a positive indicator of DXC Technology Co's ability to manage its cash flows and working capital efficiently. A lower cash conversion cycle signifies better liquidity and operational efficiency, which can positively impact the company's financial performance and overall competitiveness in the market.