Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Cisco Systems Inc., liquidity ratios
Based on: 10-K (reporting date: 2024-07-27), 10-K (reporting date: 2023-07-29), 10-K (reporting date: 2022-07-30), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-25), 10-K (reporting date: 2019-07-27).
- Current Ratio
- The current ratio demonstrates a fluctuating yet generally declining trend over the analyzed period. Starting at 1.51 in July 2019, it increased to 1.72 in July 2020, indicating an improvement in the company's short-term liquidity. However, from July 2020 onward, the ratio steadily decreased, reaching 0.91 by July 2024, which suggests a weakening ability to cover current liabilities with current assets.
- Quick Ratio
- The quick ratio follows a similar trajectory to the current ratio. It rose from 1.39 in July 2019 to 1.58 in July 2020, reflecting an enhanced quick liquidity position during this period. Subsequently, there was a decline each year to 0.69 by July 2024, indicating reduced liquid asset coverage over current liabilities and potentially increased reliance on inventory to meet short-term obligations.
- Cash Ratio
- The cash ratio shows a consistent downward trend after a slight increase from 1.05 in July 2019 to 1.16 in July 2020. From July 2020, the ratio decreased steadily, falling to 0.44 in July 2024. This indicates a significant reduction in cash and cash equivalents relative to current liabilities, which may impact the company's immediate liquidity and its capacity to fulfill short-term obligations solely through cash reserves.
Current Ratio
Cisco Systems Inc., current ratio calculation, comparison to benchmarks
| Jul 27, 2024 | Jul 29, 2023 | Jul 30, 2022 | Jul 31, 2021 | Jul 25, 2020 | Jul 27, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current assets | 36,862) | 43,348) | 36,717) | 39,112) | 43,573) | 47,755) | |
| Current liabilities | 40,584) | 31,309) | 25,640) | 26,257) | 25,331) | 31,712) | |
| Liquidity Ratio | |||||||
| Current ratio1 | 0.91 | 1.38 | 1.43 | 1.49 | 1.72 | 1.51 | |
| Benchmarks | |||||||
| Current Ratio, Competitors2 | |||||||
| Apple Inc. | 0.87 | 0.99 | 0.88 | 1.07 | 1.36 | 1.54 | |
| Arista Networks Inc. | 4.36 | 4.39 | 4.29 | 4.34 | 4.99 | — | |
| Dell Technologies Inc. | 0.74 | 0.82 | 0.80 | 0.80 | 0.70 | — | |
| Super Micro Computer Inc. | 3.81 | 2.31 | 1.91 | 1.93 | 2.25 | 2.35 | |
| Current Ratio, Sector | |||||||
| Technology Hardware & Equipment | 0.91 | 1.04 | 0.95 | 1.08 | 1.24 | — | |
| Current Ratio, Industry | |||||||
| Information Technology | 1.24 | 1.41 | 1.37 | 1.55 | 1.71 | — | |
Based on: 10-K (reporting date: 2024-07-27), 10-K (reporting date: 2023-07-29), 10-K (reporting date: 2022-07-30), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-25), 10-K (reporting date: 2019-07-27).
1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= 36,862 ÷ 40,584 = 0.91
2 Click competitor name to see calculations.
The annual financial data indicates notable fluctuations in the current assets, current liabilities, and current ratio over the analyzed periods.
- Current Assets
- Current assets demonstrate a declining trend from 47,755 million US dollars in 2019 to a low of 36,717 million US dollars in 2022. There was a brief rebound in 2023 to 43,348 million US dollars, followed by another decrease to 36,862 million US dollars in 2024. This pattern suggests variability and possible challenges in liquid asset accumulation or management over the years.
- Current Liabilities
- Current liabilities decreased significantly from 31,712 million US dollars in 2019 to 25,331 million US dollars in 2020, maintaining relatively stable levels through 2022. However, there was a marked increase in 2023 and an even more substantial rise in 2024, reaching 40,584 million US dollars. This upward movement could indicate increasing short-term obligations or financial pressures in the more recent years.
- Current Ratio
- The current ratio, which measures short-term liquidity by comparing current assets to current liabilities, shows a declining trajectory from a high of 1.72 in 2020 down to 0.91 in 2024. Ratios above 1 typically indicate sufficient current assets to cover current liabilities. The ratio falling below 1 in 2024 signals potential liquidity concerns, highlighting that current liabilities exceed current assets. This divergence, coupled with rising liabilities and fluctuating assets, may warrant closer examination of cash flow management and operational efficiency.
Overall, the data reveals a contraction in current assets alongside an escalation in current liabilities, culminating in deteriorating liquidity as evidenced by the declining current ratio. The trends suggest increasing short-term financial strain and reduced ability to meet immediate obligations without additional financing or asset liquidation.
Quick Ratio
Cisco Systems Inc., quick ratio calculation, comparison to benchmarks
| Jul 27, 2024 | Jul 29, 2023 | Jul 30, 2022 | Jul 31, 2021 | Jul 25, 2020 | Jul 27, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Cash and cash equivalents | 7,508) | 10,123) | 7,079) | 9,175) | 11,809) | 11,750) | |
| Investments | 10,346) | 16,023) | 12,188) | 15,343) | 17,610) | 21,663) | |
| Accounts receivable, net of allowance | 6,685) | 5,854) | 6,622) | 5,766) | 5,472) | 5,491) | |
| Financing receivables, net | 3,338) | 3,352) | 3,905) | 4,380) | 5,051) | 5,095) | |
| Total quick assets | 27,877) | 35,352) | 29,794) | 34,664) | 39,942) | 43,999) | |
| Current liabilities | 40,584) | 31,309) | 25,640) | 26,257) | 25,331) | 31,712) | |
| Liquidity Ratio | |||||||
| Quick ratio1 | 0.69 | 1.13 | 1.16 | 1.32 | 1.58 | 1.39 | |
| Benchmarks | |||||||
| Quick Ratio, Competitors2 | |||||||
| Apple Inc. | 0.75 | 0.84 | 0.71 | 0.91 | 1.22 | 1.38 | |
| Arista Networks Inc. | 3.46 | 3.16 | 3.05 | 3.54 | 4.25 | — | |
| Dell Technologies Inc. | 0.44 | 0.52 | 0.49 | 0.59 | 0.51 | — | |
| Super Micro Computer Inc. | 1.88 | 1.16 | 0.75 | 0.72 | 0.87 | 1.06 | |
| Quick Ratio, Sector | |||||||
| Technology Hardware & Equipment | 0.72 | 0.83 | 0.72 | 0.89 | 1.08 | — | |
| Quick Ratio, Industry | |||||||
| Information Technology | 0.96 | 1.12 | 1.08 | 1.30 | 1.46 | — | |
Based on: 10-K (reporting date: 2024-07-27), 10-K (reporting date: 2023-07-29), 10-K (reporting date: 2022-07-30), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-25), 10-K (reporting date: 2019-07-27).
1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 27,877 ÷ 40,584 = 0.69
2 Click competitor name to see calculations.
- Total Quick Assets
-
Total quick assets exhibited a downward trend overall from 2019 to 2024. Starting at 43,999 million USD in 2019, the value declined to 27,877 million USD by 2024. There was a notable decrease between 2019 and 2022, followed by a slight recovery in 2023, then a subsequent drop again in 2024 to the lowest level observed during the period.
- Current Liabilities
-
Current liabilities showed volatility with an overall increasing pattern throughout the period analyzed. Beginning at 31,712 million USD in 2019, liabilities decreased to a low of 25,331 million USD in 2020, but subsequently rose each year, reaching a peak of 40,584 million USD in 2024. The increase in liabilities after 2020 was steady and significant, indicating growing short-term obligations.
- Quick Ratio
-
The quick ratio experienced a decline over the timeframe, indicative of diminishing short-term liquidity. It rose marginally from 1.39 in 2019 to 1.58 in 2020 but then decreased continuously to 0.69 in 2024. The drop below 1.0 by 2024 suggests that quick assets were insufficient to cover current liabilities at year-end, highlighting potential liquidity concerns.
- Overall Analysis
-
The combined trends of decreasing total quick assets and increasing current liabilities led to a declining quick ratio, reflecting worsening liquidity conditions over the six-year period. This pattern suggests the company may face challenges in meeting short-term obligations with its most liquid assets, warranting further evaluation of working capital management and liquidity risk.
Cash Ratio
Cisco Systems Inc., cash ratio calculation, comparison to benchmarks
| Jul 27, 2024 | Jul 29, 2023 | Jul 30, 2022 | Jul 31, 2021 | Jul 25, 2020 | Jul 27, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Cash and cash equivalents | 7,508) | 10,123) | 7,079) | 9,175) | 11,809) | 11,750) | |
| Investments | 10,346) | 16,023) | 12,188) | 15,343) | 17,610) | 21,663) | |
| Total cash assets | 17,854) | 26,146) | 19,267) | 24,518) | 29,419) | 33,413) | |
| Current liabilities | 40,584) | 31,309) | 25,640) | 26,257) | 25,331) | 31,712) | |
| Liquidity Ratio | |||||||
| Cash ratio1 | 0.44 | 0.84 | 0.75 | 0.93 | 1.16 | 1.05 | |
| Benchmarks | |||||||
| Cash Ratio, Competitors2 | |||||||
| Apple Inc. | 0.37 | 0.42 | 0.31 | 0.50 | 0.86 | 0.95 | |
| Arista Networks Inc. | 3.04 | 2.62 | 2.34 | 3.07 | 3.74 | — | |
| Dell Technologies Inc. | 0.15 | 0.17 | 0.17 | 0.26 | 0.18 | — | |
| Super Micro Computer Inc. | 0.71 | 0.32 | 0.18 | 0.24 | 0.30 | 0.41 | |
| Cash Ratio, Sector | |||||||
| Technology Hardware & Equipment | 0.37 | 0.44 | 0.34 | 0.50 | 0.72 | — | |
| Cash Ratio, Industry | |||||||
| Information Technology | 0.57 | 0.71 | 0.66 | 0.89 | 1.06 | — | |
Based on: 10-K (reporting date: 2024-07-27), 10-K (reporting date: 2023-07-29), 10-K (reporting date: 2022-07-30), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-25), 10-K (reporting date: 2019-07-27).
1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 17,854 ÷ 40,584 = 0.44
2 Click competitor name to see calculations.
The financial data reveals a generally declining trend in total cash assets over the six-year period under review. Starting at 33,413 million US dollars in 2019, there was a consistent decrease through to 2022, reaching a low of 19,267 million US dollars. In 2023, there was a temporary increase to 26,146 million US dollars; however, this was followed by a sharp reduction to 17,854 million US dollars in 2024, marking the lowest cash holdings in the timeframe considered.
Current liabilities demonstrated fluctuations over the same period with an initial decrease from 31,712 million US dollars in 2019 to 25,331 million US dollars in 2020. From 2020 onwards, liabilities grew with some variability, culminating in a substantial increase to 40,584 million US dollars in 2024, the highest level recorded in the period analyzed.
These changes in cash assets and current liabilities are directly reflected in the cash ratio, which measures the ability to cover current liabilities with cash assets. The cash ratio began slightly above parity at 1.05 in 2019, peaked at 1.16 in 2020, then declined steadily through subsequent years. By 2024, the ratio had dropped significantly to 0.44, indicating that cash assets cover less than half of current liabilities. This downward trajectory suggests increasing liquidity risk, as the company’s cash holdings relative to immediate obligations have weakened substantially.