Parsons Corp (PSN)

Based on the provided data, I conducted a detailed analysis of Parsons Corp's liquidity ratios.

1. Current Ratio:
- The current ratio measures a company's ability to cover its short-term liabilities with its short-term assets.
- Parsons Corp's current ratio fluctuated over the quarters but generally remained above 1, indicating that the company had sufficient current assets to cover its current liabilities.
- The current ratio ranged from a low of 1.29 on December 31, 2024, to a high of 1.80 on June 30, 2024, with the latest data on March 31, 2024, showing a current ratio of 1.79.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets.
- Parsons Corp's quick ratio also displayed fluctuations over time but generally remained above 1, signifying the company's ability to cover short-term obligations without relying on the sale of inventory.
- The quick ratio ranged from a low of 0.94 on September 30, 2022, to a high of 1.35 on June 30, 2024, with the most recent data on December 31, 2024, showing a quick ratio of 1.02.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, indicating the proportion of current liabilities covered by cash and cash equivalents alone.
- Parsons Corp's cash ratio also varied throughout the quarters, reflecting the company's cash position relative to its current liabilities.
- The cash ratio ranged from a low of 0.11 on March 31, 2020, to a high of 0.50 on September 30, 2020, with the latest data on December 31, 2024, showing a cash ratio of 0.24.

In summary, Parsons Corp maintained adequate liquidity levels over the quarters as indicated by its current, quick, and cash ratios generally remaining above the respective benchmark thresholds of 1, 1, and 0.2. The company's liquidity position fluctuated due to changes in current assets and liabilities, reflecting its ability to meet short-term obligations with available resources.

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Additional liquidity measure

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

Analyzing the data provided, we observe that the cash conversion cycle initially ranged from around 55 to 61 days in 2020, indicating that the company was efficient in managing its working capital during that period. However, there was a slight increase in the cycle to around 68 to 73 days by June 30, 2022, suggesting a potential delay in converting resources into cash.

Notably, there was a significant spike in the cash conversion cycle to 77.67 days by June 30, 2023, which could indicate potential issues in managing inventory, collecting receivables, or paying off liabilities efficiently. Despite this spike, the company managed to decrease the cycle to 63.10 days by December 31, 2023, showing an effort to improve working capital efficiency.

As of the latest data available on March 31, 2024, the cash conversion cycle stood at 72.23 days, which indicates the company was taking longer to convert investments into cash relative to previous periods.

In conclusion, the trend in Parsons Corp's cash conversion cycle suggests fluctuations in working capital management efficiency over the period under review. It is essential for the company to monitor and improve its cash conversion cycle to ensure effective utilization of resources and maintaining healthy cash flows.