SolarWinds Corp (SWI)

Liquidity ratios

Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019
Current ratio 0.62 0.71 0.90 0.83 0.76 0.73 0.67 1.47 2.15 2.13 2.08 2.02 1.22 1.13 1.04 1.26 1.06 0.91 0.76 0.89
Quick ratio 0.57 0.67 0.84 0.75 0.60 0.58 0.55 1.35 2.09 2.07 2.00 1.95 1.15 1.05 0.99 1.22 1.01 0.85 0.70 0.83
Cash ratio 0.37 0.50 0.62 0.54 0.41 0.33 0.33 1.14 1.89 1.83 1.77 1.74 0.92 0.80 0.75 0.95 0.77 0.56 0.41 0.57

SolarWinds Corp's liquidity ratios have shown fluctuations over the observed periods. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has declined from a high of 2.15 in the second quarter of 2022 to 0.62 in the most recent quarter. This downward trend indicates a potential weakening in the company's short-term liquidity position.

Similarly, the quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has also experienced a decrease from 2.09 in the second quarter of 2022 to 0.57 in the latest quarter. The quick ratio follows a similar declining trend as the current ratio, reflecting a potential strain on SolarWinds Corp's ability to meet immediate payment obligations without relying on inventory.

The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, has shown a similar downward trajectory from 1.89 in the first quarter of 2022 to 0.37 in the most recent quarter. This declining trend in the cash ratio suggests a potential decrease in the company's ability to cover its short-term liabilities solely with cash on hand.

Overall, the decreasing trend in SolarWinds Corp's liquidity ratios indicates a weakening liquidity position over the observed periods, which may raise concerns about the company's ability to meet its short-term financial obligations efficiently.

Additional liquidity measure

Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019
Cash conversion cycle days 34.90 42.18 42.90 38.84 37.28 52.24 47.53 45.10 40.27 41.79 37.08 20.78 34.58 27.68 37.97 34.51 28.81 34.55 28.45 26.49

The cash conversion cycle of SolarWinds Corp has shown fluctuations over the past five years. The cash conversion cycle is a measure of how long it takes a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle is generally favorable as it indicates that the company is able to efficiently convert its resources into cash.

Looking at the historical data, we can see that the cash conversion cycle ranged from a low of 20.78 days in September 2022 to a high of 52.24 days in March 2023. Generally, a longer cash conversion cycle may indicate inefficiencies in managing inventory, collecting receivables, or paying suppliers.

In recent periods, there has been some improvement in the cash conversion cycle trend, with decreases in the cycle observed in the most recent quarters. For instance, the cycle declined from 47.53 days in December 2022 to 34.90 days in June 2024. This decrease suggests that SolarWinds Corp may have improved its efficiency in managing working capital, leading to a quicker conversion of resources into cash.

Overall, it is important for SolarWinds Corp to continue monitoring and managing its cash conversion cycle to ensure optimal working capital management and efficiency in its operations. Analyzing the factors contributing to changes in the cycle, such as inventory turnover, accounts receivable collection period, and accounts payable payment period, can provide insights on areas for further improvement.