Electronic Arts Inc (EA)

Electronic Arts Inc's liquidity ratios show a trend of fluctuation over the years.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, decreased from 2.43 in March 2021 to 0.95 in March 2025. This downward trend indicates that the company may be facing challenges in maintaining its short-term liquidity position.

The quick ratio, also known as the acid-test ratio, reflects the company's ability to pay off its current liabilities without relying on the sale of inventory. It decreased from 2.32 in March 2021 to 0.85 in March 2025. This declining trend suggests that Electronic Arts Inc may have difficulties in meeting its short-term obligations using its most liquid assets.

The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, also decreased over the years from 2.15 in March 2021 to 0.65 in March 2025. This indicates that the company's ability to cover its current liabilities solely with cash has weakened.

Overall, the declining trend in all three liquidity ratios suggests that Electronic Arts Inc may need to carefully manage its liquidity position to ensure it can meet its short-term obligations effectively.

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Additional liquidity measure

Electronic Arts Inc's cash conversion cycle has shown fluctuations over the past five years. In March 2021, the company's cash conversion cycle was 10.33 days, indicating the average number of days it took for the company to convert its investments in inventory and accounts receivable into cash.

By March 2022, the cycle increased to 14.11 days, suggesting a longer period for Electronic Arts to convert its resources into cash. However, in the following year, the cycle decreased to 13.46 days, showing improvements in the company's efficiency in managing its working capital.

In March 2024, Electronic Arts was able to significantly reduce its cash conversion cycle to 3.79 days, reflecting a faster conversion of investments into cash. This sharp decrease may indicate more effective inventory and receivables management.

By March 2025, there was a slight increase in the cash conversion cycle to 8.37 days, although still lower than the figures in the earlier years. This could suggest that Electronic Arts continued to maintain a relatively efficient process of converting its resources into cash.

Overall, Electronic Arts Inc's cash conversion cycle has fluctuated over the years, with periods of improvement and slight setbacks. The company's ability to effectively manage its working capital and convert investments into cash efficiently is vital for its financial health.