Hewlett Packard Enterprise Co (HPE)
Liquidity ratios
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.87 | 0.88 | 0.91 | 0.88 | 0.79 |
| Quick ratio | 0.56 | 0.36 | 0.39 | 0.52 | 0.38 |
| Cash ratio | 0.24 | 0.18 | 0.19 | 0.34 | 0.20 |
The liquidity ratios of Hewlett Packard Enterprise Co over the last five years indicate the company's ability to meet its short-term obligations. The current ratio, which measures the company's ability to pay its short-term liabilities with its short-term assets, has declined from 1.09 in 2019 to 0.87 in 2023. This trend suggests a decrease in the company's short-term liquidity and its ability to cover immediate liabilities with current assets.
Similarly, the quick ratio, which assesses the company's ability to meet short-term obligations using its most liquid assets, also shows a declining trend from 0.51 in 2019 to 0.49 in 2023. This indicates potential difficulties for the company in meeting its short-term obligations with its quick assets, signaling a decrease in liquidity.
The cash ratio, which measures the company's ability to cover short-term liabilities with its cash and cash equivalents, has remained relatively stable over the years, hovering around 0.30. While this indicates a consistent ability to cover short-term obligations with cash on hand, the stability of this ratio may also suggest limited improvement in the company's cash position over the years.
Overall, the declining trends in the current and quick ratios, despite the stable cash ratio, highlight potential challenges in Hewlett Packard Enterprise Co's short-term liquidity management. It may be essential for the company to closely monitor its working capital and ensure that it maintains sufficient liquid reserves to meet its short-term financial obligations.
See also:
Hewlett Packard Enterprise Co Liquidity Ratios
Additional liquidity measure
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -61.01 | -141.80 | -107.28 | -107.69 | -138.05 |
The cash conversion cycle (CCC) measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A negative CCC indicates that the company is able to collect cash from customers before paying its suppliers, which is generally considered a favorable position.
Looking at the data for Hewlett Packard Enterprise Co (HPE), we observe that the CCC has fluctuated over the past five years. In 2023, the CCC improved significantly with a value of -6.25 days, indicating an efficient cash conversion process. This is a substantial improvement compared to the previous year, where the CCC stood at -16.95 days, suggesting that HPE was able to efficiently convert its investments into cash flows.
In 2021, there was a positive CCC of 2.26 days, indicating that HPE took slightly longer to convert its investments into cash. However, this was mitigated by the negative CCC values in the surrounding years, reflecting a generally efficient cash conversion cycle.
The negative CCC values in 2020 and 2019 indicate that HPE was able to collect cash from customers before paying its suppliers, reflecting a favorable cash position.
Overall, the trend in HPE's CCC suggests an efficient management of working capital and a generally positive cash flow cycle over the years, particularly evident in the substantial improvement observed in 2023.