Parsons Corp (PSN)

Parsons Corp's liquidity ratios provide insights into the company's ability to meet its short-term obligations. The current ratio, which measures the company's ability to cover current liabilities with current assets, has shown a slight decline over the past five years but remains relatively stable, ranging from 1.33 to 1.58. This indicates that Parsons Corp has sufficient current assets to meet its short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Parsons Corp's quick ratio has fluctuated between 0.95 and 1.16 over the same period, with a downward trend in the last year. While the quick ratio is slightly lower than the current ratio, it still suggests that the company can meet its short-term obligations without relying on the sale of inventory.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents, shows a fluctuating trend for Parsons Corp over the past five years. Despite the fluctuations, the cash ratio has generally remained below 0.41, indicating that the company may have limited cash on hand to cover its current liabilities.

Overall, Parsons Corp's liquidity ratios suggest that the company has maintained a reasonable ability to meet its short-term obligations, although the declining trend in the quick ratio and the relatively low cash ratio are areas that the company may need to monitor closely to ensure continued liquidity stability.

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Additional liquidity measure

The cash conversion cycle of Parsons Corp has fluctuated over the past five years, ranging from a low of 57.58 days in 2021 to a high of 64.24 days in 2019. In general, the company takes an average of around 60 days to convert its investments in inventory and other resources into cash from sales. The slight increase in 2023 compared to 2022 suggests potential inefficiencies in managing working capital during the most recent period. It is important for Parsons Corp to closely monitor and manage its inventory, accounts receivable, and accounts payable to optimize its cash conversion cycle and improve liquidity.