Parsons Corp (PSN)

The current ratio for Parsons Corp has remained relatively stable over the years, ranging from 1.29 to 1.58. This indicates that the company has sufficient current assets to cover its current liabilities, with a higher ratio suggesting stronger liquidity.

In terms of the quick ratio, Parsons Corp has shown a slight decrease over the years, from 1.16 to 1.02. This ratio provides a more stringent measure of liquidity as it excludes inventory from current assets. The decreasing trend suggests a potential decrease in the company's ability to quickly cover its short-term obligations without relying on inventory.

Looking at the cash ratio, there is a notable decline from 0.41 in 2020 to 0.24 in 2022, before increasing again to 0.24 in 2024. This ratio indicates the company's ability to cover current liabilities with its most liquid assets, cash and cash equivalents. The decrease in 2022 might suggest a lower proportion of cash to meet short-term obligations, but the subsequent increase in 2024 shows improvement in this aspect.

Overall, while the current ratio indicates Parsons Corp's ability to meet short-term obligations, the decreasing trend in the quick ratio and the fluctuation in the cash ratio warrant further monitoring of the company's liquidity position to ensure it can effectively manage its short-term financial commitments.

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Additional liquidity measure

The cash conversion cycle for Parsons Corp, a measure of how long it takes for the company to convert its investments in inventory and other resources into cash flows from sales, has shown fluctuations over the period from December 31, 2020, to December 31, 2024.

In 2020, the company had a cash conversion cycle of 62.34 days, which decreased to 57.58 days by the end of 2021. However, the cycle increased to 64.10 days in 2022 before slightly dropping to 63.13 days in 2023. By the end of 2024, the cash conversion cycle further increased to 69.39 days.

Overall, the increasing trend in the cash conversion cycle from 2020 to 2024 suggests that Parsons Corp may be taking longer to convert its investments into cash during this period, potentially indicating challenges in managing inventory, accounts receivable, and accounts payable effectively. It is worth investigating the reasons behind these fluctuations to identify operational inefficiencies and opportunities for improvement in the company's cash conversion cycle.