NVIDIA Corporation (NVDA)
Liquidity ratios
| Jan 31, 2025 | Jan 31, 2024 | Jan 28, 2024 | Jan 31, 2023 | Jan 29, 2023 | |
|---|---|---|---|---|---|
| Current ratio | 4.44 | 4.17 | 4.17 | 3.52 | 3.52 |
| Quick ratio | 2.39 | 2.44 | 3.38 | 2.03 | 2.61 |
| Cash ratio | 2.39 | 2.44 | 2.44 | 2.03 | 2.03 |
NVIDIA Corporation's liquidity ratios demonstrate a strong financial position in terms of the company's ability to meet its short-term obligations.
The current ratio, which measures the company's ability to cover its current liabilities with its current assets, has been consistently high and improving over the years. The current ratio increased from 3.52 in January 2023 to 4.44 in January 2025. This indicates that NVIDIA has more than enough current assets to cover its current liabilities, providing a comfortable margin of safety.
The quick ratio, also known as the acid-test ratio, offers a more stringent assessment of liquidity by excluding inventory from current assets. Although the quick ratio fluctuated slightly over the period analyzed, it remained above 2 in all years, signaling that NVIDIA has an adequate amount of liquid assets to cover its short-term liabilities without relying on selling inventory.
The cash ratio, which focuses solely on the most liquid assets such as cash and cash equivalents to cover current liabilities, remained consistently high at around 2 in all years. This demonstrates that NVIDIA has a solid cash position relative to its short-term obligations, enhancing its ability to withstand financial challenges or capitalize on opportunities.
In conclusion, NVIDIA Corporation's liquidity ratios reflect a healthy liquidity position, with significant current assets and cash reserves to meet its short-term financial commitments efficiently. This strong liquidity position provides stability and flexibility for the company to manage its operations and pursue growth strategies effectively.
See also:
Additional liquidity measure
| Jan 31, 2025 | Jan 31, 2024 | Jan 28, 2024 | Jan 31, 2023 | Jan 29, 2023 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 112.72 | 115.99 | 116.63 | 162.08 | 176.38 |
The cash conversion cycle of NVIDIA Corporation has shown a consistent improvement over the last three years, with a decrease from 176.38 days on January 29, 2023, to 112.72 days on January 31, 2025. This indicates that the company has become more efficient in managing its working capital during this period.
A shorter cash conversion cycle suggests that NVIDIA is taking less time to convert its investments in inventory and accounts receivable into cash from sales. This can be a positive sign as it shows that the company is able to generate cash quickly, which could improve its liquidity and financial health.
Overall, the decreasing trend in the cash conversion cycle for NVIDIA Corporation reflects effective management of its operating cycle and better utilization of its resources to drive growth and profitability.