Progress Software Corporation (PRGS)

Progress Software Corporation's liquidity position has shown fluctuations over the past five years as reflected by its current ratio, quick ratio, and cash ratio.

1. Current Ratio:
- The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has varied significantly.
- From 2020 to 2024, the current ratio increased from 0.91 to 1.34 before dropping to 0.81, indicating an improvement in liquidity followed by a decline.

2. Quick Ratio:
- The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also experienced fluctuations during the period under consideration.
- The quick ratio ranged from a low of 0.62 in 2024 to a high of 1.11 in 2022, showing some volatility in the company's ability to cover its short-term obligations with its most liquid assets.

3. Cash Ratio:
- The cash ratio, which assesses the company's ability to cover its current liabilities with its cash and cash equivalents, demonstrated mixed results over the years.
- The cash ratio improved from 0.40 in 2020 to 0.81 in 2022, signifying a stronger position, but then declined to 0.26 in 2024, indicating the company may have reduced its cash reserves relative to its current liabilities.

In conclusion, Progress Software Corporation's liquidity ratios exhibit variability, showing both improvements and declines in liquidity over the period analyzed. It is essential for the company to carefully manage its current assets and liabilities to ensure it can meet its short-term obligations effectively.

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Additional liquidity measure

The cash conversion cycle of Progress Software Corporation has shown fluctuating trends over the years. As of November 30, 2020, the company had a relatively low cash conversion cycle of 10.74 days, indicating efficient management of its cash flow from operations to the conversion of that cash back to cash through the collection of receivables.

However, there was a significant increase in the cash conversion cycle in subsequent years. By November 30, 2021, it rose to 40.04 days, and further increased to 42.94 days by November 30, 2022. This signifies a longer period for the company to convert its investments in inventory and accounts receivable back into cash.

In the following year, the cash conversion cycle decreased to 30.46 days by November 30, 2023, showing some improvement in the efficiency of Progress Software Corporation's working capital management. Nonetheless, it increased again to 40.34 days by November 30, 2024, indicating a potential challenge in turning its sales into cash.

Overall, the fluctuating nature of Progress Software Corporation's cash conversion cycle suggests that the company may need to focus on optimizing its inventory turnover, collection of receivables, and payment of payables to enhance its working capital efficiency and cash flow management.