Kyndryl Holdings Inc (KD)

Based on the data provided for Kyndryl Holdings Inc, we can analyze its liquidity ratios as follows:

1. Current Ratio: The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets. The trend for Kyndryl's current ratio has shown improvement over the years, increasing from 0.73 in 2021 to 1.03 in 2024. A current ratio above 1 indicates that the company has more current assets than current liabilities, which is generally considered a good sign. However, in 2023, the current ratio dropped to 1.02, suggesting a slight decline in liquidity compared to the previous year.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Kyndryl's quick ratio has been somewhat volatile over the years, ranging from 0.38 in 2021 to 1.01 in 2022 before stabilizing around 0.69 in 2023 and 2024. A quick ratio above 1 is usually considered favorable as it indicates that the company can meet its short-term obligations without relying on the sale of inventory.

3. Cash Ratio: The cash ratio is the most conservative liquidity ratio, focusing solely on the company's ability to cover its current liabilities with cash and cash equivalents. Kyndryl's cash ratio has shown an upward trend from 0.01 in 2021 to 0.34 in 2024, indicating an improved ability to meet short-term obligations with readily available cash. A higher cash ratio implies a stronger financial position in terms of liquidity.

Overall, Kyndryl's liquidity ratios have demonstrated mixed performance over the years, with fluctuations in the quick ratio and current ratio, while the cash ratio has shown consistent improvement. It is essential for the company to maintain adequate liquidity to meet its short-term obligations and navigate potential financial challenges effectively.

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Additional liquidity measure

Kyndryl Holdings Inc's cash conversion cycle has shown fluctuations over the years based on the data provided. The cash conversion cycle is a crucial metric indicating the time taken for a company to convert its investments in inventory into cash inflows from sales.

- As of March 31, 2021, the cash conversion cycle was 36.97 days, reflecting the time it took for Kyndryl to sell inventory and collect cash from customers.
- By March 31, 2022, the cycle increased to 47.54 days, indicating a longer time to convert inventory into sales and subsequently into cash inflows.
- However, there was a significant improvement by March 31, 2023, with the cycle reducing to 15.23 days, signifying a more efficient management of inventory and collections, resulting in quicker cash conversion.
- The cycle slightly increased to 27.34 days as of March 31, 2024, hinting at potential challenges in the cash conversion process compared to the previous year.
- Notably, by March 31, 2025, the cash conversion cycle reached 0.00 days, which could suggest that Kyndryl was able to immediately convert inventory into sales and subsequently cash without delays.

Overall, Kyndryl Holdings Inc's cash conversion cycle has showcased varying trends over the years, reflecting changes in inventory management efficiency and collection practices. Further analysis would be needed to understand the underlying factors driving these fluctuations and to assess the company's overall liquidity and operational effectiveness.