Oracle Corporation (ORCL)
Liquidity ratios
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | |
|---|---|---|---|---|---|
| Current ratio | 0.75 | 0.72 | 0.91 | 1.62 | 2.30 |
| Quick ratio | 0.61 | 0.59 | 0.74 | 1.43 | 2.15 |
| Cash ratio | 0.34 | 0.34 | 0.44 | 1.12 | 1.93 |
The liquidity ratios of Oracle Corporation over the period from May 31, 2021, to May 31, 2025, demonstrate a trend of gradual decline. The current ratio, which measures the company's ability to meet its short-term liabilities with its short-term assets, decreased from 2.30 in 2021 to 0.72 in 2024 before experiencing a slight uptick to 0.75 in 2025. This decline suggests a weakening in overall liquidity position, indicating that Oracle's short-term assets relative to its short-term liabilities have diminished over time.
Similarly, the quick ratio, which excludes inventory from current assets for a more conservative measure of liquidity, fell from 2.15 in 2021 to 0.59 in 2024, with a marginal increase to 0.61 in 2025. This reduction reflects a decrease in the company's most liquid assets relative to its current liabilities, further highlighting the trend of diminishing liquidity.
The cash ratio, which measures the company’s ability to cover its short-term obligations using cash and cash equivalents alone, shows a pronounced decline from 1.93 in 2021 to 0.34 in 2023, remaining steady at 0.34 in 2024 and 2025. This indicates that Oracle’s reliance on cash and cash equivalents to meet short-term obligations has significantly decreased over the period.
Overall, these ratios depict a consistent decline in Oracle's liquidity position across all measures, suggesting increased difficulty in meeting short-term liabilities solely with its most liquid assets. The trend warrants close monitoring, as sustained declines could impact the company’s ability to manage immediate financial commitments effectively.
See also:
Additional liquidity measure
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -754.53 | 5.51 | 26.15 | 9.96 | 20.75 |
The analysis of Oracle Corporation’s cash conversion cycle (CCC) from May 31, 2021, through May 31, 2025, reveals notable fluctuations in the company's operational efficiency over this period.
In 2021, the CCC was approximately 20.75 days, indicating that it took about three weeks for Oracle to convert its investments in inventory and receivables into cash, factoring in the period it took to pay its suppliers. This suggests a relatively moderate efficiency in managing working capital components.
By 2022, the CCC contracted significantly to approximately 9.96 days. This reduction reflects an improvement in Oracle’s operational cycle, potentially due to expedited receivables collection, extended payable periods, or increased inventory turnover, leading to increased cash flow liquidity within roughly a month.
The next year, 2023, saw a substantial increase in the CCC to approximately 26.15 days. This lengthening implies decreased efficiency, possibly caused by slower receivables collection, increased inventory holding periods, or earlier payments to suppliers, extending the period before cash is realized.
In 2024, the CCC declined markedly to approximately 5.51 days, indicating a significant enhancement in working capital management. Oracle likely optimized its receivables collection or extended its payables, diminishing the cycle duration and boosting cash flow speed.
However, by 2025, the CCC exhibited an atypical and drastic shift to approximately -754.53 days, indicating a negative cash conversion cycle of significant magnitude. A negative CCC generally suggests that Oracle is able to collect receivables and begin generating cash before it needs to pay its suppliers, effectively gaining early cash inflows. However, the extraordinarily negative figure in this case may also imply possible anomalies or extraordinary operational circumstances, such as prolonged payables period, delayed receivables, or extraordinary market conditions impacting receivables and payables timing.
Overall, the trend demonstrates considerable variability, with periods of both operational efficiency improvements and significant fluctuations in cash flow timing. The extreme negative value in 2025 warrants further scrutiny to understand underlying factors; nonetheless, it signifies that Oracle gained substantial operational leverage during this period, at least in theoretical terms, assuming these figures accurately reflect underlying operational realities.