NVIDIA Corporation (NVDA)
Liquidity ratios
| Jan 31, 2025 | Oct 31, 2024 | Jul 31, 2024 | Apr 30, 2024 | Jan 31, 2024 | Jan 28, 2024 | Oct 31, 2023 | Oct 29, 2023 | Jul 31, 2023 | Jul 30, 2023 | Apr 30, 2023 | Jan 31, 2023 | Jan 29, 2023 | Oct 31, 2022 | Oct 30, 2022 | Jul 31, 2022 | May 1, 2022 | Apr 30, 2022 | Jan 31, 2022 | Jan 30, 2022 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 4.44 | 4.10 | 4.27 | 3.53 | 4.17 | 4.17 | 3.59 | 3.59 | 2.79 | 2.79 | 3.43 | 3.52 | 3.52 | 3.39 | 3.39 | 3.62 | 5.32 | 5.32 | 6.65 | 6.65 |
| Quick ratio | 2.39 | 2.34 | 2.49 | 2.07 | 2.44 | 3.38 | 2.01 | 2.92 | 1.55 | 2.23 | 2.11 | 2.03 | 2.61 | 1.92 | 2.63 | 2.25 | 3.66 | 3.66 | 4.89 | 5.96 |
| Cash ratio | 2.39 | 2.34 | 2.49 | 2.07 | 2.44 | 2.44 | 2.01 | 2.01 | 1.55 | 1.55 | 2.11 | 2.03 | 2.03 | 1.92 | 1.92 | 2.25 | 3.66 | 3.66 | 4.89 | 4.89 |
Based on the provided data, we can see that NVIDIA Corporation's liquidity ratios have shown some fluctuations over the periods analyzed.
1. Current Ratio: The current ratio measures the company's ability to cover its short-term obligations with its current assets. NVIDIA's current ratio has generally been above 3.0, indicating a strong ability to meet its short-term liabilities. However, there was a noticeable decline in the current ratio from July 2023 to July 2024, which reached its lowest point at 2.79 before recovering slightly to 4.44 by January 2025.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventories from current assets. NVIDIA's quick ratio has exhibited similar trends to the current ratio, with some variability over time. The quick ratio declined from January 2022 to July 2023, hitting a low of 1.55, before improving to 2.39 by January 2025.
3. Cash Ratio: The cash ratio is the most conservative liquidity ratio, considering only cash and cash equivalents to cover short-term obligations. NVIDIA's cash ratio has followed a similar pattern to the quick ratio, reflecting the company's ability to meet its immediate liabilities. The cash ratio ranged from a low of 1.55 in July 2023 to a high of 4.89 in January 2022 and remained relatively stable thereafter.
Overall, while there have been fluctuations in NVIDIA's liquidity ratios, the company has generally maintained a strong liquidity position, with the ability to meet its short-term obligations efficiently. Investors and stakeholders typically consider these ratios as indicators of a company's financial health and ability to manage its working capital effectively.
See also:
Additional liquidity measure
| Jan 31, 2025 | Oct 31, 2024 | Jul 31, 2024 | Apr 30, 2024 | Jan 31, 2024 | Jan 28, 2024 | Oct 31, 2023 | Oct 29, 2023 | Jul 31, 2023 | Jul 30, 2023 | Apr 30, 2023 | Jan 31, 2023 | Jan 29, 2023 | Oct 31, 2022 | Oct 30, 2022 | Jul 31, 2022 | May 1, 2022 | Apr 30, 2022 | Jan 31, 2022 | Jan 30, 2022 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 112.73 | 102.18 | 102.68 | 102.01 | 96.09 | 100.95 | 99.51 | 114.99 | 122.66 | 157.75 | 172.90 | 189.36 | 182.46 | 133.76 | 149.56 | 116.86 | 38.62 | 108.74 | 94.59 | 92.07 |
The cash conversion cycle of NVIDIA Corporation has shown fluctuations over the period from January 30, 2022, to January 31, 2025. The cash conversion cycle is a measure of how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
The cycle started at 92.07 days on January 30, 2022, increased to 189.36 days on January 31, 2023, and then gradually decreased, reaching 112.73 days on January 31, 2025. During this period, the company experienced both longer and shorter cash conversion cycles, indicating fluctuations in its efficiency in managing its working capital.
The peak cash conversion cycle of 189.36 days on January 31, 2023, may suggest that the company faced challenges in efficiently managing its inventory, accounts receivable, and accounts payable during that period. However, the subsequent decline in the cycle indicates an improvement in managing these components, leading to a shorter cycle by January 31, 2025.
Overall, it is essential for NVIDIA Corporation to strive for a shorter cash conversion cycle as it indicates efficiency in managing its operational activities, maximizing cash flows, and potentially improving profitability. Keeping a close eye on inventory management, accounts receivable collection, and payment terms with suppliers could help in further optimizing the cash conversion cycle in the future.