Liquidity Services Inc (LQDT)

Liquidity ratios

Sep 30, 2024 Sep 30, 2023 Sep 30, 2022 Sep 30, 2021 Sep 30, 2020
Current ratio 1.28 1.21 1.05 1.21 1.27
Quick ratio 1.08 1.04 0.89 1.03 1.09
Cash ratio 1.00 0.98 0.79 0.97 1.02

The liquidity ratios of Liquidity Services Inc over the past five years show variations in the company's ability to meet its short-term obligations with its current assets. The current ratio, which measures the company's ability to pay its current liabilities with its current assets, has generally improved from 1.27 in 2020 to 1.28 in 2024. This indicates that the company has slightly more current assets relative to its current liabilities in the most recent year, compared to the previous years.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Liquidity Services Inc's quick ratio has fluctuated over the years, reaching a low of 0.89 in 2022 and improving to 1.08 in 2024. This suggests that the company may have reduced its reliance on inventory to meet its short-term obligations in the most recent year.

The cash ratio, which indicates the proportion of current liabilities covered by cash and cash equivalents, has shown mixed results over the years. While it increased to 1.00 in 2024 from 1.02 in 2020, there was a significant drop in 2022 to 0.79. This implies that Liquidity Services Inc may have had higher cash reserves relative to its current liabilities in 2024, compared to the prior years.

Overall, Liquidity Services Inc has shown improvements in its liquidity position over the past five years, as evidenced by the increasing current ratio and cash ratio, and the fluctuating but generally improving quick ratio. This suggests that the company has been managing its short-term financial obligations more effectively, potentially enhancing its financial stability. However, further analysis of the company's cash management practices and working capital efficiency would provide a more comprehensive understanding of its liquidity management.


Additional liquidity measure

Sep 30, 2024 Sep 30, 2023 Sep 30, 2022 Sep 30, 2021 Sep 30, 2020
Cash conversion cycle days -45.04 -36.66 -41.44 -49.75 -27.33

Liquidity Services Inc experienced a fluctuating trend in its cash conversion cycle over the past five years. In 2024, the company's cash conversion cycle improved to -45.04 days, indicating a shorter time needed to convert inventory into cash. This improvement suggests a more efficient management of working capital and operations. However, it's essential to consider the negative value, which might be due to the company's industry or business model.

Comparing to the previous years, the cash conversion cycle was -36.66 days in 2023, -41.44 days in 2022, -49.75 days in 2021, and -27.33 days in 2020. This demonstrates a mix of positive and negative trends in the efficiency of Liquidity Services Inc's cash management. Overall, a negative cash conversion cycle implies the company is able to generate cash from its operations faster than it takes to pay its obligations, which can be a positive sign of liquidity and efficiency.