Palo Alto Networks Inc (PANW)
Liquidity ratios
| Jul 31, 2025 | Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | |
|---|---|---|---|---|---|
| Current ratio | 0.89 | 0.89 | 0.78 | 0.77 | 0.91 |
| Quick ratio | 0.82 | 0.77 | 0.68 | 0.70 | 0.81 |
| Cash ratio | 0.36 | 0.34 | 0.31 | 0.44 | 0.57 |
The liquidity ratios of Palo Alto Networks Inc. over the period from July 31, 2021, to July 31, 2025, demonstrate some noteworthy trends and insights into the company's short-term financial health.
The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, exhibited a decline from 0.91 in 2021 to 0.77 in 2022, indicating a weakening of liquidity during that period. However, subsequent years saw a modest recovery, with the ratio rising to 0.78 in 2023 and further improving to 0.89 in both 2024 and 2025. Despite this positive trend, the current ratio remained below the ideal benchmark of 1.0 throughout the entire period, suggesting that the company's current assets were consistently insufficient to cover its current liabilities, which may reflect a conservative or aggressive working capital management approach.
The quick ratio, which excludes inventory from current assets to focus on the most liquid assets, followed a similar pattern. It decreased from 0.81 in 2021 to 0.70 in 2022, then declined further to 0.68 in 2023. Subsequently, it increased to 0.77 in 2024 and reached 0.82 in 2025. Like the current ratio, the quick ratio remained below 1.0 in all years, indicating that even when excluding inventory, the company’s liquid assets were not fully sufficient to cover short-term liabilities, though there is evidence of gradual improvement.
The cash ratio, which is the most conservative liquidity measure focusing solely on cash and cash-equivalents relative to current liabilities, showed a more pronounced decline from 0.57 in 2021 to 0.44 in 2022 and continued downward to 0.31 in 2023. In the subsequent years, the cash ratio experienced slight increases, reaching 0.34 in 2024 and 0.36 in 2025. Despite these incremental improvements, the cash ratio remained substantially below the 1.0 threshold throughout the period, highlighting limited liquidity in cash terms relative to short-term obligations.
Overall, the analysis of these ratios reveals that Palo Alto Networks Inc. experienced a period of declining liquidity from 2021 to 2023, with ratios falling below ideal levels. Although there has been a recovery starting in 2024, the ratios remained below one, suggesting ongoing liquidity constraints. These trends indicate a consistent reliance on less liquid assets or possibly effective management of working capital, but they also point to potential challenges in covering short-term liabilities solely through liquid resources, especially in cash and near-cash positions.
See also:
Additional liquidity measure
| Jul 31, 2025 | Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 108.59 | 131.46 | 190.57 | 114.96 | 90.09 |
The analysis of Palo Alto Networks Inc.'s cash conversion cycle (CCC) over the specified period reveals notable fluctuations, indicating shifts in the company's operational efficiency related to working capital management.
As of July 31, 2021, the CCC stood at approximately 90.09 days, suggesting the company took around three months to convert its investments in inventory and receivables into cash, after accounting for Payables. By July 31, 2022, the cycle lengthened significantly to approximately 114.96 days, indicating a slower rate in cash conversion, which could imply extended receivables collection periods, increased inventory holding times, or delays in payable cycles.
The trend accelerated markedly by July 31, 2023, with the CCC reaching approximately 190.57 days—more than six months—reflecting a substantial deterioration in working capital efficiency. This sharp increase may suggest challenges such as extended customer receivables, increased inventory levels, or delayed payments to suppliers, potentially affecting liquidity and operational flexibility.
Subsequently, the CCC demonstrated signs of improvement. By July 31, 2024, it decreased to around 131.46 days, indicating some recovery in cash flow cycles. Continuing this trend, the cycle further contracted to approximately 108.59 days by July 31, 2025, moving closer to the earlier levels seen in 2021, and suggesting a partial normalization of the company's operational efficiency in managing its receivables, inventories, and payables.
Overall, the cash conversion cycle exhibited considerable volatility over the analyzed period. The significant elongation in 2023 warrants further investigation into the underlying causes, as prolonged CCC can impact the company's liquidity position and working capital management effectiveness. Conversely, the subsequent reduction signifies potential improvements in operational processes or strategic adjustments.