Guidewire Software Inc (GWRE)

Quick ratio

		Jul 31, 2024	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020
Cash	US$ in thousands	547,992	401,813	606,303	384,910	366,969
Short-term investments	US$ in thousands	455,576	396,872	369,865	734,517	766,527
Receivables	US$ in thousands	137,339	151,034	143,797	104,068	114,242
Total current liabilities	US$ in thousands	837,635	373,261	337,518	300,314	225,198
Quick ratio		1.36	2.54	3.32	4.07	5.54

July 31, 2024 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($547,992K + $455,576K + $137,339K) ÷ $837,635K
= 1.36

The quick ratio of Guidewire Software Inc has been on a decreasing trend over the past five years. It stood at a robust 5.54 as of July 31, 2020, indicating a strong ability to meet short-term liabilities with highly liquid assets. However, the ratio declined to 4.07 by July 31, 2021, and further decreased to 3.32 by July 31, 2022. This suggests a reduction in the company's ability to cover immediate obligations without relying on inventory.

The quick ratio continued to fall, reaching 2.54 by July 31, 2023, signaling a diminishing liquidity position compared to the previous years. By July 31, 2024, the quick ratio dropped significantly to 1.36, indicating a potential liquidity challenge in meeting short-term liabilities with quick assets alone.

Overall, the declining trend in Guidewire Software Inc's quick ratio over the years raises concerns about its short-term liquidity position and ability to meet immediate financial obligations without relying on inventory. It is important for the company to closely monitor and manage its liquidity to ensure financial stability and operational continuity.