Progress Software Corporation (PRGS)

The liquidity ratios for Progress Software Corp. provide insights into the company's ability to meet its short-term financial obligations. The current ratio, which measures the company's ability to pay off its short-term liabilities with its current assets, has shown a fluctuating trend over the past five years. It decreased from 1.18 in 2019 to 0.94 in 2023, indicating a potential deterioration in the company's short-term liquidity position.

Similarly, the quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has followed a similar trend, declining from 1.18 in 2019 to 0.94 in 2023. This suggests a potential decrease in the company's ability to quickly cover its short-term obligations with its most liquid assets.

The cash ratio, which specifically measures the company's ability to cover its current liabilities with its cash and cash equivalents, has also exhibited a declining trend. It decreased from 0.83 in 2019 to 0.50 in 2023, indicating a potential reduction in the company's capacity to settle its short-term obligations solely with its readily available cash.

Overall, the decreasing trends in these liquidity ratios raise concerns about Progress Software Corp.'s ability to efficiently meet its short-term financial commitments. It may be advisable for stakeholders to further investigate the underlying reasons behind these trends and assess the company's liquidity management strategies to ensure its continued financial stability.

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Additional liquidity measure

The cash conversion cycle (CCC) of Progress Software Corp. has exhibited some fluctuations over the past five years. In November 2023, the company's CCC stood at 35.05 days, compared to 30.21 days in November 2022 and 30.66 days in November 2021. This indicates a slight increase in the time it takes for the company to convert its resources into cash. When compared to November 2020, the CCC has shown a noticeable increase from 22.77 days to 35.05 days, signifying a lengthening of the cash conversion process.

It is important to note that in November 2019, the CCC was negative at -4.49 days, indicating an efficient cash conversion process, where the company was able to collect cash from customers before having to pay suppliers and other obligations. However, the subsequent years show a shift towards a positive CCC, signifying a longer cash conversion cycle.

The increase in the CCC may suggest an extended period between the company's payment for inventory and the collection of receivables, potentially impacting its liquidity and working capital management. Progress Software Corp. should closely monitor and assess this trend to ensure efficient cash utilization and optimize its working capital cycle.