Intuit Inc (INTU)
Liquidity ratios
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.29 | 1.47 | 1.39 | 1.94 | 2.26 |
| Quick ratio | 0.62 | 1.08 | 1.19 | 1.70 | 2.05 |
| Cash ratio | 0.54 | 0.97 | 0.90 | 1.46 | 2.00 |
Intuit Inc's liquidity ratios have exhibited a decreasing trend over the last five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, declined from 2.26 in 2020 to 1.29 in 2024. This indicates a potential weakening in Intuit's short-term liquidity position, as the current assets are less able to cover the current liabilities.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. Intuit's quick ratio decreased from 2.05 in 2020 to 0.62 in 2024, indicating a more significant decline in the company's ability to meet its short-term obligations without relying on inventory.
The cash ratio, which is the most conservative liquidity measure, dropped from 2.00 in 2020 to 0.54 in 2024. This highlights a substantial decrease in Intuit's ability to cover its current liabilities with its cash and cash equivalents alone.
Overall, the decreasing trend in Intuit Inc's liquidity ratios raises concerns about the company's ability to meet its short-term obligations without experiencing financial strain. It may be advisable for stakeholders to monitor Intuit's liquidity closely and assess potential strategies to improve its short-term financial health.
See also:
Additional liquidity measure
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -27.99 | -2.91 | -18.48 | -34.75 | -30.65 |
Intuit Inc's cash conversion cycle has fluctuated over the past five years. In the most recent period as of July 31, 2024, the company's cash conversion cycle was negative 27.99 days, indicating a relatively efficient operating cycle. This is an improvement compared to the previous year when the cash conversion cycle was negative 2.91 days.
In general, a negative cash conversion cycle means that Intuit Inc is able to generate cash from its operating activities before having to pay its suppliers, indicating strong liquidity and efficient management of working capital. The trend of improving cash conversion cycle over the years suggests that the company has been effective in managing its cash flows and working capital efficiently.
However, it is important to note that a negative cash conversion cycle may also indicate aggressive practices such as stretching payables or inventory management strategies that might not be sustainable in the long term. Therefore, it is essential for Intuit Inc to maintain a balance between liquidity and profitability to ensure long-term financial health and sustainability.