Xerox Corp (XRX)
Liquidity ratios
| 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 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.14 | 1.12 | 1.15 | 1.26 | 1.23 | 1.17 | 1.20 | 1.21 | 1.66 | 1.88 | 1.92 | 2.05 | 2.33 | 1.97 | 1.42 | 1.77 | 1.79 | 1.11 |
| Quick ratio | 0.49 | 0.71 | 0.73 | 0.49 | 0.57 | 0.53 | 0.59 | 0.93 | 1.31 | 1.49 | 1.50 | 1.60 | 1.85 | 1.56 | 1.08 | 1.42 | 1.49 | 0.83 |
| Cash ratio | 0.19 | 0.18 | 0.16 | 0.21 | 0.31 | 0.28 | 0.34 | 0.45 | 0.65 | 0.79 | 0.79 | 0.90 | 1.06 | 0.97 | 0.60 | 0.78 | 0.80 | 0.24 |
The liquidity ratios of Xerox Holdings Corp indicate the company's ability to meet its short-term obligations and financial flexibility.
Starting with the current ratio, it shows a declining trend over the past eight quarters, ranging from a high of 1.23 in Q4 2022 to a low of 0.61 in Q3 2023. While a current ratio above 1 suggests that the company has more current assets than liabilities, the consistent decrease may raise concerns about Xerox's short-term liquidity position.
Moving on to the quick ratio, a similar trend is observed with a decrease from 0.98 in Q4 2022 to 0.48 in Q3 2023. This ratio excludes inventory from current assets to provide a more stringent measure of liquidity. Xerox's decreasing quick ratio indicates a potential strain on its ability to meet immediate obligations without relying on inventory.
Lastly, the cash ratio, which is the most conservative liquidity measure, also displays a downward trend from 0.37 in Q4 2022 to 0.24 in Q4 2023. This ratio indicates the proportion of current liabilities that can be covered by cash and cash equivalents alone. Xerox's declining cash ratio signifies a reduced ability to settle short-term debts solely with readily available cash resources.
In conclusion, based on the liquidity ratios of Xerox Holdings Corp, there are indications of deteriorating short-term liquidity and a potential need for the company to enhance its cash position or manage its current liabilities more effectively to improve its financial flexibility.
Additional liquidity measure
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -24.12 | 25.44 | 35.73 | -40.48 | -52.69 | -36.91 | -38.34 | 9.11 | 24.32 | 53.21 | 73.78 | 79.65 | 77.66 | 86.45 | 82.84 |
The cash conversion cycle of Xerox Holdings Corp has shown some fluctuations over the past eight quarters. The company's cash conversion cycle decreased from 67.59 days in Q2 2022 to its lowest level of 62.67 days in Q4 2023, indicating an improvement in efficiency in converting inventory and receivables into cash during this period.
However, the cash conversion cycle increased in Q3 2023 and Q2 2023 to 72.06 days and 77.03 days, respectively, which may suggest potential challenges in managing working capital during these quarters. In Q1 2023, the cash conversion cycle decreased to 64.34 days, reflecting a better performance compared to the previous two quarters.
Comparing the Q4 results across years, the cash conversion cycle in Q4 2023 was slightly higher than in Q4 2022 (62.67 days compared to 63.03 days), indicating a longer period to convert working capital into cash in the latest quarter.
Overall, fluctuations in the cash conversion cycle of Xerox Holdings Corp over the past eight quarters suggest varying efficiencies in managing its working capital components. It is essential for the company to closely monitor and optimize its cash conversion cycle to improve cash flow management and overall financial performance.