Gen Digital Inc. (GEN)

Gen Digital Inc.'s liquidity ratios indicate its ability to meet short-term financial obligations with its current assets. The current ratio has experienced fluctuations over the past five years, ranging from 0.43 to 1.17. Notably, the current ratio has declined from 1.17 in 2020 to 0.51 in 2024, signaling potential liquidity challenges.

Similarly, the quick ratio shows a declining trend from 0.96 in 2020 to 0.45 in 2024. The quick ratio excludes inventory from current assets, providing a more stringent measure of liquidity. The decreasing quick ratio may suggest a decreasing ability to cover immediate liabilities without relying on the sale of inventory.

Furthermore, the cash ratio, which reflects the proportion of cash and cash equivalents to current liabilities, has also shown a downward trajectory over the years, dropping from 0.86 in 2020 to 0.32 in 2024. This indicates a decreasing ability to cover current liabilities solely with available cash resources.

Overall, the declining trend in all three liquidity ratios signals potential liquidity challenges for Gen Digital Inc. It may face difficulties in meeting short-term obligations with its current asset base, which could lead to financial strain or funding issues if not addressed. Management should closely monitor and manage its liquidity position to ensure continued financial stability.

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Additional liquidity measure

The cash conversion cycle of Gen Digital Inc. has varied significantly over the past five years.

In March 2020 and March 2021, the company had a relatively high cash conversion cycle of 208.22 days and 212.98 days respectively, indicating that it took a considerable amount of time for the company to convert its investments in raw materials and production into cash from sales.

However, there was a substantial improvement in the cash conversion cycle in March 2022, which dropped to 13.97 days. This could be attributed to better management of inventory, accounts receivable, and accounts payable, resulting in a faster conversion of assets into cash.

The trend continued to improve in March 2023, with the cash conversion cycle further decreasing to 3.31 days, indicating that the company was becoming more efficient in managing its working capital.

Most recently, in March 2024, the company achieved a negative cash conversion cycle of -0.69 days, suggesting that Gen Digital Inc. is now able to convert its investments into cash before it needs to pay its suppliers. This could signify strong working capital management and efficient operations.

Overall, the decreasing trend in the cash conversion cycle over the years shows that Gen Digital Inc. has been successful in optimizing its working capital management and improving its liquidity position. This could be a positive indicator of the company's operational efficiency and financial health.