Fair Isaac Corporation (FICO)

Fair Isaac Corporation's liquidity ratios have shown varying trends over the past five years.

The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has generally been improving. From 2020 to 2021, there was a significant increase in the current ratio, indicating a stronger liquidity position. Although there was a slight dip in 2022, the ratio continued to improve in 2023 and 2024. The current ratio in 2024 stands at 1.62, suggesting that the company has $1.62 in current assets for every dollar of current liabilities.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Fair Isaac Corporation's quick ratio has also shown an increasing trend over the years, indicating a stronger ability to meet short-term obligations without relying on inventory. The quick ratio in 2024 is at 2.07, which signifies that the company has $2.07 in liquid assets for every dollar of current liabilities.

The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, has fluctuated over the years. There was an improvement from 2020 to 2021, followed by a decline in 2022, before increasing again in 2023 and decreasing in 2024. The cash ratio in 2024 stands at 0.40, indicating that Fair Isaac Corporation has $0.40 in cash and cash equivalents for every dollar of current liabilities.

Overall, Fair Isaac Corporation's liquidity ratios reflect a generally strong liquidity position, especially in terms of the quick ratio, which shows a significant increase over the years. However, it is important for the company to continue monitoring and managing its liquidity to ensure it can meet its short-term obligations effectively.

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Additional liquidity measure

The cash conversion cycle of Fair Isaac Corporation has exhibited fluctuations over the past five years. In September 2024, the company's cash conversion cycle stood at 111.91 days, representing an improvement from the previous year's figure of 130.12 days. This suggests that Fair Isaac Corporation was able to manage its working capital more efficiently in converting its investments into cash during the most recent period.

Comparing the current cycle to the data from the preceding years, we observe variability in the company's cash conversion efficiency. In 2023, the cycle was notably prolonged at 130.12 days, indicating a potential challenge in liquidity management. However, Fair Isaac Corporation demonstrated a better performance in 2022 with a cycle of 115.05 days. The year 2021 showed further improvement with a cycle of 101.21 days, indicating effective management of receivables, inventory, and payables.

In 2020, the cash conversion cycle increased to 122.13 days, signifying a period of inefficiency in the company's working capital management. The variability in the cash conversion cycle over the five-year period suggests that Fair Isaac Corporation has experienced fluctuations in its ability to efficiently convert its resources into cash.

Overall, the decreasing trend in the cash conversion cycle from 2020 to 2024 indicates an improvement in Fair Isaac Corporation's working capital management efficiency. However, the company should continue to focus on maintaining this positive trajectory to ensure optimal utilization of its resources and sustainable cash flow generation.