Leidos Holdings Inc (LDOS)

Based on the provided data, the liquidity ratios of Leidos Holdings Inc have exhibited some fluctuations over the years.

1. Current Ratio: The current ratio measures the company's ability to cover its short-term obligations with its current assets. Leidos Holdings Inc's current ratio declined from 1.15 in 2020 to 0.92 in 2022 before recovering to 1.34 in 2023 and slightly decreasing to 1.21 in 2024. Despite the fluctuations, the company, in most years, maintained a current ratio above 1, indicating that it generally had sufficient current assets to meet its short-term liabilities.

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. Leidos Holdings Inc's quick ratio followed a similar trend to the current ratio, starting at 0.92 in 2020, decreasing to 0.73 in 2022, before increasing to 1.07 in 2023 and then decreasing slightly to 0.98 in 2024. The quick ratio also stayed above 1 in most years, reflecting the company's ability to cover its short-term liabilities without relying on inventory.

3. Cash Ratio: The cash ratio focuses solely on the company's ability to cover its current liabilities with its cash and cash equivalents. Leidos Holdings Inc's cash ratio showed some variability but generally remained relatively stable. The cash ratio improved from 0.18 in 2020 to 0.26 in both 2023 and 2024, with a slight dip to 0.13 in 2022. This indicates that the company held enough cash to cover a certain portion of its current liabilities in most years.

In conclusion, while Leidos Holdings Inc experienced fluctuations in its liquidity ratios over the years, it generally maintained adequate levels of liquidity to meet its short-term obligations. It is important for the company to monitor these ratios closely to ensure continued liquidity and financial stability.

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Additional liquidity measure

The cash conversion cycle of Leidos Holdings Inc has shown relatively stable performance over the years. As of December 31, 2020, the company had a cash conversion cycle of 47.70 days, which decreased to 45.15 days by December 31, 2021. Subsequently, the cash conversion cycle slightly increased to 46.36 days by December 31, 2022, and then decreased again to 45.64 days as of December 31, 2023. By December 31, 2024, the cash conversion cycle had increased marginally to 47.67 days.

Overall, the company's cash conversion cycle indicates that it takes Leidos Holdings Inc approximately 45 to 48 days to convert its investments in inventory and accounts receivable into cash. This metric reflects the efficiency of the company in managing its working capital and operations. The stability in the cash conversion cycle over the years suggests that the company has been effectively managing its inventory, receivables, and payables to optimize its cash flow and liquidity position.