Fortinet Inc (FTNT)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.19 | 1.24 | 1.55 | 1.50 | 1.90 |
| Quick ratio | 1.03 | 1.13 | 1.45 | 1.40 | 1.79 |
| Cash ratio | 0.66 | 0.72 | 1.10 | 1.00 | 1.42 |
Looking at Fortinet Inc's liquidity ratios over the past five years, we can see a declining trend in the current ratio, quick ratio, and cash ratio. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, decreased from 1.88 in 2019 to 1.19 in 2023. This suggests that Fortinet's current assets may be decreasing relative to its current liabilities, indicating a potential liquidity risk.
Similarly, the quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, also decreased from 1.80 in 2019 to 1.06 in 2023. This implies that Fortinet may have a lower ability to meet its short-term obligations using its most liquid assets.
The cash ratio, which specifically measures the company's ability to cover its current liabilities with its cash and cash equivalents, decreased from 1.43 in 2019 to 0.68 in 2023. This indicates a decreasing level of cash availability relative to current liabilities, which could pose challenges for Fortinet in meeting its short-term obligations.
Overall, the declining trend in Fortinet Inc's liquidity ratios over the past five years suggests that the company may be facing increasing liquidity challenges and should closely monitor its ability to meet its short-term financial obligations.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 127.32 | 109.37 | 93.53 | 101.14 | 97.42 |
The cash conversion cycle of Fortinet Inc has seen fluctuations in recent years. In 2023, the company's cash conversion cycle was 179.22 days, which represents an increase compared to the previous year's cycle of 111.38 days. This indicates that Fortinet Inc took longer to convert its investments in inventory and accounts receivable into cash during the year.
Historically, the company experienced a downward trend in the cash conversion cycle from 2019 to 2022, with the cycle decreasing from 107.65 days to 111.38 days. However, in 2023, there was a significant increase in the cycle, suggesting potential inefficiencies in managing its working capital.
A longer cash conversion cycle may indicate challenges in managing inventory, collecting receivables, or optimizing payment terms with suppliers. Fortinet Inc may want to evaluate its working capital management practices to improve efficiency and liquidity in the future.