ZoomInfo Technologies Inc (ZI)

ZoomInfo Technologies Inc's liquidity ratios indicate its ability to meet short-term obligations and manage day-to-day operations effectively.

The current ratio, which measures the company's ability to cover its current liabilities with current assets, shows a fluctuating trend over the years. It decreased from 1.37 in 2020 to 0.69 in 2024, with a slight recovery in 2022 and 2023. A ratio above 1 typically indicates good short-term financial health, but the decreasing trend raises concerns about the company's liquidity position.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. ZoomInfo's quick ratio followed a similar pattern as the current ratio, dropping from 1.32 in 2020 to 0.60 in 2024, with intermittent improvements in 2022 and 2023. A quick ratio above 1 is considered favorable, but the declining trend suggests potential liquidity challenges in the future.

The cash ratio, which is the most stringent liquidity measure, focuses solely on the company's ability to cover its current liabilities with cash and cash equivalents. ZoomInfo's cash ratio displayed a downward trend from 0.94 in 2020 to 0.21 in 2024, with some improvement in 2022. A higher cash ratio signifies a stronger ability to meet short-term obligations, but the significant decrease over the years may indicate liquidity constraints and the need for better management of cash resources.

Overall, the declining trend in ZoomInfo Technologies Inc's liquidity ratios raises concerns about its short-term liquidity position and highlights the importance of effective cash flow management to ensure the company can meet its financial obligations promptly.

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Additional liquidity measure

The cash conversion cycle of ZoomInfo Technologies Inc has shown a downward trend over the years, indicating an improvement in the efficiency of its working capital management.

As of December 31, 2020, the company's cash conversion cycle stood at 121.70 days, reflecting the number of days it takes for ZoomInfo to convert its investment in inventory and other resources into cash flows from sales.

By December 31, 2021, the cash conversion cycle decreased to 90.36 days, demonstrating a more streamlined process in converting resources to cash.

Further improvements were seen in the subsequent years, with the cycle falling to 62.71 days by December 31, 2022, before increasing slightly to 78.92 days by December 31, 2023.

By the end of December 31, 2024, the cash conversion cycle had decreased again to 70.03 days, showcasing the company's ability to efficiently manage its working capital and generate cash flows from its operational activities.

Overall, the decreasing trend in the cash conversion cycle indicates that ZoomInfo Technologies Inc has been able to optimize its operations, enhance liquidity, and potentially improve profitability through more effective management of its cash conversion processes.