EPAM Systems Inc (EPAM)

EPAM Systems Inc's liquidity ratios, based on the provided data, show the following trends over the years:

1. Current Ratio:
- The current ratio has fluctuated over the years, starting at 4.11 in 2020, decreasing to 2.97 in 2021, and then increasing to 4.79 in 2023.
- A current ratio above 1 indicates that EPAM Systems Inc has more current assets than current liabilities to cover its short-term obligations.
- The company's current ratio has generally been healthy, although it experienced a dip in 2021 before recovering in subsequent years.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets.
- EPAM Systems Inc's quick ratio decreased from 2.97 in 2020 to 1.57 in 2024, showing a decline in its ability to cover immediate liabilities with its most liquid assets.
- A quick ratio above 1 is generally considered acceptable, indicating the company's ability to meet short-term obligations without relying on the sale of inventory.

3. Cash Ratio:
- The cash ratio, which is the most conservative liquidity measure, focuses solely on cash and cash equivalents to cover current liabilities.
- EPAM Systems Inc's cash ratio mirrored the trend of the quick ratio, falling from 2.97 in 2020 to 1.57 in 2024.
- A cash ratio of 1 or higher is usually preferred, suggesting that the company has sufficient cash on hand to meet its short-term debts without the need to liquidate other assets.

Overall, EPAM Systems Inc's liquidity position appears to have fluctuated over the years, with the current ratio showing resilience and improvement after an initial dip in 2021. However, the declining trend in the quick and cash ratios may indicate a potential liquidity risk, warranting further monitoring and analysis to ensure the company's ability to meet its short-term obligations effectively.

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Additional liquidity measure

The cash conversion cycle of EPAM Systems Inc has consistently been 0.00 days over the period from December 31, 2020, to December 31, 2024. This indicates that the company is able to efficiently convert its investments in inventory and accounts receivable into cash as there is virtually no delay in the cash conversion process. A cash conversion cycle of 0.00 days suggests that EPAM Systems Inc manages its working capital effectively, allowing for swift cash inflows from sales and minimal cash outflows for operating expenses. The company's ability to maintain such a low cash conversion cycle signifies strong liquidity and efficient operational performance.