Intuit Inc (INTU)

The analysis of Intuit Inc.'s liquidity ratios over the given period reveals several noteworthy trends and shifts in the company’s ability to meet its short-term obligations.

Starting with the current ratio, which measures the company's ability to cover current liabilities with its current assets, the data indicates a significant decrease from a peak of 3.09 on October 31, 2020, to a low of approximately 1.17 on January 31, 2024. Prior to this decline, the current ratio generally maintained levels above 2.1, suggesting robust liquidity. The downward trend reflects a gradual erosion of current assets relative to current liabilities, although the ratio remains above 1.0 throughout the entire period, indicating that the company continually maintains enough current assets to meet short-term obligations, albeit with diminishing margin.

The quick ratio, which excludes inventory and other less liquid assets, follows a similar downward trend, declining from 2.75 in October 2020 to a low of approximately 0.57 on January 31, 2024. This decline suggests that the company’s most liquid assets—such as receivables and cash—have become less sufficient relative to current liabilities over time. The quick ratio frequently remains above 1.0 in the earlier part of the period but dips below 1.0 after approximately January 2022 and continues to fluctuate around or below this threshold in subsequent periods, indicating potential tightening in liquidity attributable to declining liquid assets or increasing short-term liabilities.

The cash ratio, which gauges the company’s ability to cover current liabilities solely with cash and cash equivalents, exhibits a more pronounced decline. Initially, it stands at a healthy 2.69 in October 2020, but drops to approximately 0.34 by January 2024. Periods of notable decline are observed, particularly after January 2022, where the cash ratio remains below 1.0, with some months falling below 0.5. This trend indicates that the company's available cash reserves have decreased substantially relative to its short-term obligations, reflecting a potential reduction in cash holdings or an increase in current liabilities.

Overall, the data suggests that Intuit Inc. experienced a substantial easing of liquidity from October 2020 through early 2024. While the current ratio maintained a position above the critical threshold of 1.0, indicating ongoing short-term solvency, the reductions in the quick and cash ratios imply that more liquid assets have become less sufficient relative to immediate liabilities. This progression indicates an increased reliance on less liquid current assets for liquidity support.

If sustained, these trends could pose risks to the company's short-term financial resilience. However, the ratios remain above critical levels in the most recent periods, implying that, although liquidity has diminished, it remains stable enough to cover short-term commitments.

It is important to contextualize these ratio movements with operational and strategic factors, including changes in cash management, shifts in current liabilities, and overall operational efficiency, which are not depicted here but are essential for comprehensive liquidity assessment.

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See also:

Intuit Inc Liquidity Ratios (Quarterly Data)

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Additional liquidity measure

The detailed analysis of Intuit Inc.'s cash conversion cycle (CCC) over the specified periods reveals significant fluctuations, reflecting changes in operational efficiency, working capital management, and overall liquidity dynamics.

Initially, from October 31, 2020, through October 31, 2022, the CCC was consistently negative, ranging from approximately -63.56 days to -123.55 days. This negative cycle indicates that Intuit was able to generate cash from its operations before the payment obligations were due, a scenario characteristic of efficient working capital management and strong cash flow positioning.

However, a notable shift occurs starting in the late 2022 period. By October 31, 2022, the CCC had increased from around -63 days to -4.10 days as of January 31, 2023, approaching a near-zero or slightly positive value. This trend continued into April 2023, with the CCC remaining negative at -27.39 days, while a brief positive movement appeared in July 2023 at 3.16 days. Such movements suggest a temporary slowdown in cash collection relative to payment cycles, potentially indicating adjustments in receivable and payable management, changes in sales or billing strategies, or seasonal operational impacts.

A dramatic transformation is evident as of October 31, 2023, when the CCC surged to 240.25 days. This substantial positive cycle implies that, on average, it takes over 240 days to convert investments in inventory and receivables into cash, signifying a potential accumulation of accounts receivable and/or inventory, or delays in collection and cash conversion processes. This unconventional shift from a consistently negative to a highly positive CCC could reflect extraordinary operational, strategic, or market conditions influencing cash flow timing.

Subsequent periods show a partial reversal, with the CCC decreasing to 336.60 days in January 2024 and then oscillating again into negative territory by April 2024 at -57.40 days and July 2024 at -43.89 days. These fluctuations imply intermittent improvements in cash collection efficiency, though the cycle remained volatile. By October 2024, the CCC improved to -35.64 days, but further positive values reemerged in January 2025 and April 2025 at 22.11 and 45.81 days, respectively, before returning to negative at -39.02 days in July 2025.

Overall, the trend indicates a period of stability with negative and low positive weeks in the initial years, transitioning into extraordinary positive values in late 2023 and early 2024, possibly signaling operational challenges, strategic shifts, or changes in the product or billing cycles. The recurring oscillations suggest periods of temporary improvement followed by reversion to less favorable cash flow timing.

In summary, while Intuit historically maintained a negative CCC indicative of efficient cash flow management, recent data reveals significant volatility and substantial deviations, particularly in late 2023 and early 2024, which warrant further investigation into underlying operational strategies, receivables management, and market conditions influencing cash conversion efficiency.