Simulations Plus Inc (SLP)

Simulations Plus Inc's liquidity ratios have shown a consistent and strong trend over the past five years. The current ratio, which measures the company's ability to cover short-term liabilities with current assets, has decreased from 23.45 in 2020 to 3.26 in 2024. Despite the decline, the current ratio remains healthy and above 1, indicating that the company has sufficient current assets to meet its short-term obligations.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, also shows a similar declining trend from 22.42 in 2020 to 2.44 in 2024. However, like the current ratio, the quick ratio remains well above 1, suggesting that Simulations Plus Inc has strong liquidity levels and can meet its short-term obligations without relying on inventory.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents as current assets, has also decreased from 21.07 in 2020 to 1.68 in 2024. While the cash ratio has decreased significantly, it is still above 1, indicating that the company has sufficient cash on hand to cover its immediate liabilities.

Overall, Simulations Plus Inc's liquidity ratios indicate that the company has maintained a strong financial position with ample liquidity to meet its short-term obligations. The decreasing trend in these ratios over the years may suggest that the company is utilizing its current assets more efficiently or possibly investing in long-term growth opportunities.

---

Additional liquidity measure

The cash conversion cycle of Simulations Plus Inc has exhibited fluctuations over the past five years, with a decreasing trend from 132.68 days in 2022 to 54.72 days in 2024. This indicates that the company has been more efficient in managing its working capital and converting its investments into cash.

A lower cash conversion cycle suggests that Simulations Plus is improving its liquidity position, as it takes less time to sell its inventory, collect receivables, and pay its creditors. This can be a positive indicator of operational efficiency and financial health, potentially leading to improved profitability and cash flow management.

Overall, the decreasing trend in the cash conversion cycle for Simulations Plus Inc over the past five years is a favorable sign, indicating improved working capital management and potential for sustained financial performance.