HP Inc (HPQ)
Liquidity ratios
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.73 | 0.75 | 0.76 | 0.79 | 0.80 |
| Quick ratio | 0.49 | 0.17 | 0.42 | 0.48 | 0.50 |
| Cash ratio | 0.26 | 0.12 | 0.15 | 0.20 | 0.18 |
The liquidity ratios of HP Inc, as indicated by the current ratio, quick ratio, and cash ratio, have shown a declining trend over the past five years.
The current ratio, which measures the company's ability to meet short-term liabilities with short-term assets, decreased from 0.80 in 2019 to 0.73 in 2023. This suggests that HP Inc's short-term liquidity position has weakened over this period.
Similarly, the quick ratio, which excludes inventory from current assets, has also exhibited a downward trend, falling from 0.57 in 2019 to 0.45 in 2023. This indicates a diminishing ability to cover immediate obligations with the most liquid assets.
The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, has also experienced a decline from 0.22 in 2019 to 0.19 in 2023. This may suggest a reduced capacity to settle short-term liabilities solely with cash on hand.
Overall, the decreasing trend in these liquidity ratios indicates a potential deterioration in HP Inc's short-term liquidity position, highlighting the importance of closely monitoring its ability to meet current obligations with available assets.
See also:
Additional liquidity measure
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -24.17 | -48.04 | -14.28 | -20.90 | -19.90 |
The cash conversion cycle (CCC) for HP Inc has fluctuated over the past five years. In 2023, the company's CCC was -18.38 days, indicating an increase compared to the previous year's CCC of -15.48 days. In 2021, the CCC was -8.50 days, an improvement from the CCC of -14.65 days in 2020 and -13.96 days in 2019.
The negative CCC values suggest that HP Inc is efficiently managing its cash flow, as it takes less time to convert its investments in inventory, accounts receivable, and accounts payable into cash. However, the increasing trend in the CCC from 2021 to 2023 may indicate a lengthening of the time it takes for the company to convert its resources into cash, potentially impacting its liquidity and working capital management.
Overall, analyzing the CCC provides insights into HP Inc's ability to efficiently manage its working capital and convert its resources into cash, reflecting its operational efficiency and financial health.