Synopsys Inc (SNPS)
Liquidity ratios
| Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 2.44 | 1.15 | 1.09 | 1.16 | 1.19 |
| Quick ratio | 1.90 | 0.87 | 0.87 | 0.91 | 0.97 |
| Cash ratio | 1.53 | 0.53 | 0.56 | 0.65 | 0.58 |
The liquidity ratios of Synopsys Inc indicate the company's ability to meet its short-term obligations effectively.
1. Current Ratio:
- The current ratio has shown an improving trend over the years, reaching 2.44 in Oct 31, 2024. This indicates that the company has $2.44 in current assets for every $1 in current liabilities.
- The current ratio exceeding 1 suggests that Synopsys Inc has an adequate level of current assets to cover its short-term obligations.
2. Quick Ratio:
- The quick ratio has also displayed a positive trend, reaching 1.90 in Oct 31, 2024. This ratio considers only the most liquid assets (cash equivalents, marketable securities, and accounts receivable) to current liabilities.
- A quick ratio above 1 demonstrates that the company can meet its short-term obligations without relying on inventory sales.
3. Cash Ratio:
- Synopsys Inc's cash ratio has significantly improved over the years, reaching 1.53 in Oct 31, 2024. This ratio reveals the company's ability to cover its current liabilities with cash and cash equivalents alone.
- A cash ratio above 1 suggests a strong ability to settle short-term debts without relying on other current assets.
Overall, the liquidity ratios of Synopsys Inc have shown a favorable trend, indicating that the company has a healthy financial position and is capable of meeting its short-term obligations efficiently.
See also:
Additional liquidity measure
| Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 103.58 | 123.45 | 120.33 | 137.84 | 156.93 |
Synopsys Inc's cash conversion cycle has shown a decreasing trend over the past five years, indicating improved efficiency in managing its working capital. The company took 103.58 days on average to convert investments in inventory and other resources into cash receipts from sales in fiscal year 2024, compared to 123.45 days in 2023 and 120.33 days in 2022. This reduction suggests that Synopsys has been able to streamline its operations and convert its assets into cash more quickly.
The decreasing trend in the cash conversion cycle can be attributed to factors such as improved inventory management, more efficient accounts receivable collection, and optimized accounts payable processes. A shorter cash conversion cycle is generally favorable as it signifies that the company is able to generate cash from its operations more swiftly, enhancing liquidity and potentially reducing the need for external financing.
Overall, the declining trend in Synopsys Inc's cash conversion cycle demonstrates the company's ability to efficiently manage working capital and convert its assets into cash, which is a positive indicator of operational efficiency and financial health.