Guidewire Software Inc (GWRE)
Liquidity ratios
| Oct 31, 2024 | Jul 31, 2024 | Apr 30, 2024 | Jan 31, 2024 | Oct 31, 2023 | Jul 31, 2023 | Apr 30, 2023 | Jan 31, 2023 | Oct 31, 2022 | Jul 31, 2022 | Apr 30, 2022 | Jan 31, 2022 | Oct 31, 2021 | Jul 31, 2021 | Apr 30, 2021 | Jan 31, 2021 | Oct 31, 2020 | Jul 31, 2020 | Apr 30, 2020 | Jan 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 2.66 | 1.55 | 1.53 | 3.45 | 3.72 | 2.95 | 3.65 | 3.66 | 3.73 | 3.71 | 4.45 | 4.66 | 5.29 | 4.51 | 6.10 | 6.50 | 7.27 | 5.96 | 6.93 | 6.84 |
| Quick ratio | 2.33 | 1.36 | 1.26 | 2.95 | 3.07 | 2.54 | 2.97 | 3.06 | 3.14 | 3.32 | 3.77 | 4.03 | 4.52 | 4.07 | 5.41 | 5.88 | 6.62 | 5.54 | 6.30 | 6.33 |
| Cash ratio | 2.18 | 1.20 | 1.11 | 2.53 | 2.72 | 2.14 | 2.50 | 2.60 | 2.79 | 2.89 | 3.41 | 3.55 | 4.12 | 3.73 | 5.08 | 5.44 | 6.20 | 5.03 | 5.85 | 5.78 |
Guidewire Software Inc's liquidity ratios have shown some fluctuations over time.
The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has been relatively high in the past but has been decreasing in recent periods. From January 31, 2020, to October 31, 2024, the current ratio has decreased from 6.84 to 2.66, which could indicate a potential weakening in the company's short-term liquidity position. However, it is important to note that the current ratio has fluctuated during this period, which may be due to changes in the company's current assets and liabilities.
On the other hand, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has followed a similar trend as the current ratio. The quick ratio has decreased from 6.33 on January 31, 2020, to 2.33 on October 31, 2024. This trend suggests that the company's ability to meet short-term obligations with quick assets has also declined over the period under consideration.
Lastly, the cash ratio, which indicates the firm's ability to cover its current liabilities with its cash and cash equivalents, has also shown a downward trend over time. From January 31, 2020, to October 31, 2024, the cash ratio has decreased from 5.78 to 2.18. This decline may signal a reduction in the company's capacity to repay its short-term obligations solely with its cash reserves.
In conclusion, the liquidity ratios of Guidewire Software Inc have exhibited a decreasing trend over the past few years, indicating a potential deterioration in the company's liquidity position. It would be prudent for stakeholders to further investigate the factors contributing to these trends and assess the company's ability to meet its short-term financial obligations effectively.
Additional liquidity measure
| Oct 31, 2024 | Jul 31, 2024 | Apr 30, 2024 | Jan 31, 2024 | Oct 31, 2023 | Jul 31, 2023 | Apr 30, 2023 | Jan 31, 2023 | Oct 31, 2022 | Jul 31, 2022 | Apr 30, 2022 | Jan 31, 2022 | Oct 31, 2021 | Jul 31, 2021 | Apr 30, 2021 | Jan 31, 2021 | Oct 31, 2020 | Jul 31, 2020 | Apr 30, 2020 | Jan 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 19.82 | 52.26 | 28.78 | 40.58 | 28.34 | 50.84 | 44.92 | 37.65 | 20.56 | 47.28 | 25.29 | 65.63 | 25.91 | 36.87 | 20.98 | 31.60 | 25.70 | 43.69 | 29.10 | 32.54 |
Guidewire Software Inc's cash conversion cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales. Looking at the historical data provided, we observe fluctuations in the cash conversion cycle over the periods analyzed.
The cash conversion cycle ranged from a low of 19.82 days on October 31, 2024, to a high of 65.63 days on January 31, 2022. A lower cash conversion cycle indicates that the company is able to efficiently manage its cash flows, inventory, and receivables, leading to quicker conversions into cash. On the other hand, a higher cash conversion cycle may suggest inefficiencies in managing working capital and could potentially lead to cash flow constraints.
Analyzing trends, we see some periods of improvement, such as the decreasing trend from July 31, 2021, to April 30, 2022, showing better management of cash conversion. However, there are also periods of increase, like the significant spike seen on January 31, 2022, which may require further examination to identify the underlying reasons.
Overall, it is crucial for Guidewire Software Inc to closely monitor and manage its cash conversion cycle to ensure efficient operations, optimize working capital, and maintain a healthy cash flow position. A stable and decreasing trend in the cash conversion cycle can indicate effective working capital management and improved financial health for the company.