Pure Storage Inc (PSTG)

Pure Storage Inc's liquidity ratios provide insights into its ability to meet short-term financial obligations. The current ratio has shown fluctuations over the past five years, ranging from 1.41 to 3.08. In the most recent fiscal year, the current ratio stands at 1.83, indicating that the company has $1.83 in current assets for every $1 in current liabilities. This suggests a modest improvement in short-term liquidity compared to the previous year.

The quick ratio, which excludes inventory from current assets, has followed a similar trend, ranging from 1.25 to 2.86. The current quick ratio of 1.61 implies that Pure Storage Inc has $1.61 in liquid assets that can be quickly converted to cash for every $1 in current liabilities. This ratio has also shown a slight improvement from the prior year.

The cash ratio, which is the most conservative measure of liquidity, shows the cash and cash equivalents available to cover current liabilities. Pure Storage Inc's cash ratio has varied between 0.90 and 2.11 over the past five years, with the latest ratio at 1.12. This indicates that the company has $1.12 in cash to cover each $1 in current liabilities, reflecting a moderate improvement in liquidity compared to the previous year.

Overall, Pure Storage Inc's liquidity ratios demonstrate a generally stable financial position with the ability to meet its short-term obligations. However, management should continue to monitor these ratios to ensure adequate liquidity levels for sustained operations and growth.

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Additional liquidity measure

The cash conversion cycle of Pure Storage Inc has shown some fluctuation over the past five years. In the most recent year, as of February 4, 2024, the company's cash conversion cycle stood at 78.97 days, indicating that it takes approximately 79 days for Pure Storage Inc to convert its investments in inventory and other resources into cash flows from sales. Comparing this figure to prior years, we observe a slight improvement from 2023 when the cycle was 78.60 days.

Looking further back, in 2022, the cash conversion cycle was 86.00 days, showing a decrease in efficiency compared to the more recent figures. In 2021 and 2020, the company's cash conversion cycle stood at 96.70 days and 94.26 days, respectively. These figures suggest that Pure Storage Inc took longer to convert its investments into cash flows in those years compared to the more recent performance.

Overall, the trend in Pure Storage Inc's cash conversion cycle points to a general improvement in efficiency in recent years, with the company managing to shorten the time it takes to convert resources into cash. However, continuous monitoring and optimization of the cash conversion cycle will be important for the company to maintain and improve its financial performance in the future.