QuinStreet Inc (QNST)

QuinStreet Inc's liquidity ratios have shown a declining trend over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, decreased from 2.16 in 2020 to 1.34 in 2024. This indicates a potential weakening in the company's short-term liquidity position.

Similarly, the quick ratio, a more stringent measure of liquidity as it excludes inventory from current assets, also declined from 2.05 in 2020 to 1.28 in 2024. The quick ratio suggests the company may have more difficulty meeting its short-term obligations without relying on inventory in the most recent year.

The cash ratio, which represents the proportion of current liabilities that could be covered by the company's cash and cash equivalents, has also decreased significantly from 1.25 in 2020 to 0.40 in 2024. This substantial drop implies that QuinStreet Inc may have less cash on hand relative to its current liabilities in the most recent year.

Overall, the downward trend in all three liquidity ratios indicates that QuinStreet Inc may be experiencing challenges in maintaining its short-term liquidity position. Investors and creditors may view these declining ratios as a potential red flag, warranting further investigation into the company's financial health and liquidity management strategies.

---

Additional liquidity measure

The cash conversion cycle for QuinStreet Inc has fluctuated over the past five years. In June 2024, the company's cash conversion cycle was 35.53 days, indicating that on average it took 35.53 days for QuinStreet to convert its investments in inventory and other resources back into cash. This represents a significant increase from the previous year's cash conversion cycle of 16.65 days.

Comparing to the years prior to 2023, the cash conversion cycle was generally higher, with the longest cycle observed in June 2021 at 30.52 days. This trend suggests that the company may be experiencing challenges in efficiently managing its inventory, accounts receivable, and accounts payable.

The increase in the cash conversion cycle can indicate potential liquidity issues or inefficiencies in the company's operations. Management should closely monitor and analyze the factors contributing to the prolonged cycle to identify areas for improvement and optimize cash flow management.

Overall, QuinStreet Inc's cash conversion cycle has shown variability over the years, and a higher cycle length in 2024 may warrant further investigation into the company's working capital management practices to enhance operational efficiency and financial performance.