Teradata Corp (TDC)

Based on the provided liquidity ratios of Teradata Corp, we can observe the following trends:

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term obligations with its short-term assets.
- Teradata Corp's current ratio fluctuated over the analyzed periods, ranging from a low of 0.78 on March 31, 2024, to a high of 1.15 on June 30, 2021.
- Generally, a current ratio above 1 indicates that the company has more current assets than current liabilities, which is favorable for meeting its short-term obligations.
- However, the ratio started to decline after June 30, 2022, reaching 0.81 by December 31, 2024, which indicates a potential liquidity concern as current assets may not be sufficient to cover current liabilities.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets.
- Teradata Corp's quick ratio varied throughout the periods, with a low of 0.34 on both March 31, 2024, and June 30, 2024.
- A quick ratio below 1 suggests that the company may have difficulty meeting its short-term obligations without relying on selling inventory.
- The ratios generally remained below 1 after September 30, 2023, indicating a potential liquidity risk, especially as the ratio declined below 0.5 in the latter periods.

3. Cash Ratio:
- The cash ratio is the most conservative measure of liquidity, focusing only on the ability to cover current liabilities with cash and cash equivalents.
- Teradata Corp's cash ratio follows a similar trend to the quick ratio, as it also declined over the analyzed periods.
- The company's ability to cover short-term obligations with cash decreased, reaching a low of 0.34 on both March 31, 2024, and June 30, 2024.
- A cash ratio below 1 signifies a potential liquidity challenge, as the company may not have enough liquid resources to meet immediate obligations without relying on other assets.

In summary, based on the liquidity ratios of Teradata Corp, there are indications of potential liquidity challenges as the current ratio, quick ratio, and cash ratio have declined over the analyzed periods, suggesting a decreasing ability to cover short-term obligations with current assets and cash. Additional monitoring and evaluation of the company's liquidity position may be necessary to address these concerns.

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Additional liquidity measure

The cash conversion cycle of Teradata Corp has shown fluctuations over the reported periods. The cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

From March 31, 2020, to June 30, 2020, the cash conversion cycle decreased marginally from 11.24 days to 10.93 days. This decrease was followed by a significant improvement to 5.97 days by September 30, 2020. However, the cycle increased to 12.96 days by December 31, 2020.

Subsequently, there were some fluctuations observed in the cash conversion cycle with periods of both improvement and deterioration. Notably, the cycle decreased to 3.69 days by March 31, 2023, representing a significant improvement. However, it increased again to 11.34 days by June 30, 2024.

Overall, Teradata Corp's cash conversion cycle has displayed variability, indicating potential inefficiencies in managing working capital and cash flow. Monitoring and managing this cycle effectively is crucial for optimizing liquidity and operational efficiency.