Cisco Systems Inc. (NASDAQ:CSCO)

The analysis of the liquidity ratios over the six-year period reveals a generally declining trend in Cisco Systems Inc.'s short-term financial stability metrics, followed by a slight recovery in the most recent year.

Current Ratio

The current ratio demonstrates a steady decline from 1.72 in July 2020 to 1.38 in July 2023, indicating a gradual reduction in the company's ability to meet its short-term liabilities with current assets. There is a more pronounced drop to 0.91 in July 2024, which suggests a significant weakening of liquidity. However, in July 2025, the current ratio slightly recovers to 1.00, signaling a marginal improvement in liquidity position.

Quick Ratio

Similar to the current ratio, the quick ratio decreases consistently from 1.58 in July 2020 to 1.13 in July 2023. This ratio, which excludes inventories, follows a comparable downward trend, reflecting a diminishing capacity to cover current liabilities with more liquid assets. The decline intensifies in July 2024 to 0.69, suggesting increased reliance on less liquid assets. A minor increase to 0.74 in July 2025 suggests a slight enhancement in quick assets relative to current liabilities.

Cash Ratio

The cash ratio shows a continual decline over the years, moving from 1.16 in July 2020 down to 0.84 in July 2023, and then falling sharply to 0.44 in July 2024. This indicates a reduced buffer of cash and cash equivalents to immediately cover current liabilities. A marginal improvement to 0.46 in July 2025 is observed, which modestly enhances the company's immediate liquidity stance but remains substantially lower than earlier periods.

Overall, the liquidity ratios exhibit a pattern of declining short-term solvency from 2020 through 2024, with a slight recovery in 2025. This trend suggests that the company experienced progressively tighter liquidity conditions over the period, which may warrant closer attention to working capital management and cash flow adequacy to ensure operational stability.

Current Assets

Current assets exhibited a fluctuating trend over the observed period. The value decreased from 43,573 million USD in 2020 to 39,112 million USD in 2021 and further declined to 36,717 million USD in 2022. There was a notable recovery in 2023, reaching 43,348 million USD, followed by a decline again in 2024 and 2025 to 36,862 million USD and 34,986 million USD respectively. Overall, current assets demonstrated volatility with a peak in 2023.

Current Liabilities

Current liabilities showed a generally increasing trajectory throughout the period. Starting at 25,331 million USD in 2020, liabilities rose gradually to 26,257 million USD in 2021 and slightly decreased to 25,640 million USD in 2022. A significant increase occurred in 2023, reaching 31,309 million USD, and the upward trend continued sharply in 2024, peaking at 40,584 million USD before decreasing to 35,064 million USD in 2025. The data suggests an overall growth in short-term obligations, with a pronounced spike in 2024.

Current Ratio

The current ratio declined consistently from 1.72 in 2020 to 1.49 in 2021 and further to 1.43 in 2022, indicating a gradual reduction in short-term liquidity. This declining trend continued in 2023 at 1.38. A significant drop occurred in 2024 when the current ratio fell below 1.0 to 0.91, signaling potential liquidity concerns as current liabilities exceeded current assets. In 2025, a slight improvement was observed with the ratio rising to 1.0, which still reflects a marginal capability to cover short-term liabilities.

Summary Insights

Throughout the period, current assets experienced fluctuations, with a peak in 2023 before declining. Current liabilities generally increased, particularly with a sharp rise in 2024, which negatively impacted liquidity metrics. The declining current ratio highlights weakening short-term financial stability and a narrowing margin for meeting short-term obligations. The ratio falling below 1 in 2024 is notable, indicating increased risk, although a minor recovery was seen in 2025. These patterns suggest growing liquidity pressure, particularly in the most recent years analyzed.

The financial analysis over the indicated periods reveals distinct trends in liquidity and short-term financial health.

Total Quick Assets

There is a general downward trend in total quick assets from 2020 through 2025, with values decreasing from 39,942 million USD in 2020 to 25,872 million USD in 2025. Notably, there was a dip from 34,664 million USD in 2021 to 29,794 million USD in 2022, followed by a slight recovery to 35,352 million USD in 2023. However, after 2023, the amounts declined significantly through to 2025.

Current Liabilities

Current liabilities demonstrated fluctuations with an overall increasing tendency. Starting at 25,331 million USD in 2020, they rose gradually to 31,309 million USD in 2023 before peaking at 40,584 million USD in 2024 and then slightly decreasing to 35,064 million USD in 2025. This rise, particularly the sharp increase in 2024, indicates mounting short-term obligations over the years.

Quick Ratio

The quick ratio, which measures the ability to meet short-term obligations using quick assets, decreased steadily from 1.58 in 2020 to a low of 0.69 in 2024 before a marginal improvement to 0.74 in 2025. The decline below 1.0 in the last two periods signifies that quick assets were insufficient to cover current liabilities, potentially indicating liquidity concerns.

In summary, the company's ability to cover short-term liabilities using quick assets has weakened over the years, as reflected in the decreasing quick assets and increasing current liabilities. The quick ratio's decline below unity suggests a potential liquidity risk, warranting closer attention to working capital management and short-term financial strategies moving forward.

Total Cash Assets

The total cash assets show a generally declining trend over the observed periods. Starting from US$29,419 million in mid-2020, the cash assets decreased significantly to US$16,110 million by mid-2025. There was a notable drop between 2021 and 2022, followed by a partial recovery in 2023, and another decrease through 2024 and 2025.

Current Liabilities

Current liabilities exhibit an overall increasing pattern, rising from US$25,331 million in mid-2020 to a peak of US$40,584 million in mid-2024 before declining to US$35,064 million in mid-2025. This trend indicates increasing short-term obligations over the five-year period, with some reduction in the last year.

Cash Ratio

The cash ratio, representing the company’s ability to cover current liabilities with cash assets, has decreased steadily from 1.16 in mid-2020 to 0.46 in mid-2025. The ratio dropped below 1 starting in 2021 and continued declining, indicating a diminishing liquidity position relative to current liabilities. The lowest points were seen in 2024 and 2025, suggesting reduced immediate solvency.