ExlService Holdings Inc (EXLS)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 2.74 | 2.08 | 2.20 | 1.17 | 2.76 |
| Quick ratio | 2.22 | 1.83 | 2.00 | 1.03 | 2.78 |
| Cash ratio | 1.17 | 0.89 | 1.07 | 0.64 | 1.82 |
ExlService Holdings Inc's liquidity ratios show variability over the years. The current ratio, which measures short-term liquidity using current assets relative to current liabilities, decreased from 2.76 in 2020 to 1.17 in 2021, before recovering to 2.20 in 2022. However, there was a slight decline to 2.08 in 2023, followed by a rebound to 2.74 in 2024. Generally, a current ratio above 1 indicates that the company can cover its short-term liabilities.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also experienced fluctuations. It decreased from 2.78 in 2020 to 1.03 in 2021, before rising to 2.00 in 2022. However, it decreased in the following years to 1.83 in 2023 and increased to 2.22 in 2024. A quick ratio greater than 1 suggests that the company can meet its short-term obligations without relying on selling inventory.
The cash ratio, which indicates the company's ability to cover its current liabilities with cash and cash equivalents, dropped from 1.82 in 2020 to 0.64 in 2021, before improving to 1.07 in 2022. However, it declined slightly to 0.89 in 2023 and then increased to 1.17 in 2024. A cash ratio above 1 signifies that the company can pay off its current liabilities using only cash on hand.
Overall, while the liquidity ratios of ExlService Holdings Inc exhibited some volatility, the company generally maintained levels above 1 across all three ratios throughout the years, indicating a reasonable ability to meet its short-term obligations.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 59.09 | 68.14 | 66.13 | 75.86 | 87.57 |
The cash conversion cycle is a crucial metric that reflects the efficiency of a company in managing its working capital. Lower values indicate that the company is able to convert its investments in inventory and accounts receivable into cash more rapidly, thus potentially improving its liquidity and financial performance.
Based on the provided data for ExlService Holdings Inc, the trend in the cash conversion cycle over the years shows a consistent improvement. Starting at 87.57 days as of December 31, 2020, the company has managed to reduce its cash conversion cycle to 75.86 days by December 31, 2021, and further to 66.13 days by December 31, 2022. The trend continues to improve with the cycle decreasing to 68.14 days as of December 31, 2023, and notably dropping to 59.09 days by December 31, 2024.
This favorable trend indicates that ExlService Holdings Inc has been successful in managing its inventory, receivables, and payables more efficiently over the years. The company has been able to optimize its working capital and operational processes, leading to a quicker conversion of invested capital into cash. This improvement suggests a positive impact on the company's liquidity position and overall financial health.