Fiserv Inc. (NASDAQ:FISV)

Current Ratio

The current ratio shows a generally stable trend from March 2017 through early 2019, ranging between 0.9 and 1.11, which suggests a consistent level of short-term liquidity. However, there is a noticeable anomaly in June 2019 where the ratio spikes dramatically to 4.97, an outlier that may require further investigation. After this spike, the ratio returns to approximately 1.08 and remains steady around 1.03 to 1.06 through to March 2022, indicating maintained liquidity with moderate fluctuations.

Quick Ratio

The quick ratio follows a similar trend as the current ratio, indicating a stable ability to meet short-term obligations without relying on inventory. Values range between 0.65 and 0.77 from March 2017 to late 2018. Like the current ratio, it spikes sharply to 4.59 in June 2019, again suggesting a significant one-time event or possible reporting inconsistency. Following this, the quick ratio normalizes to around 0.95 to 1.00 and remains stable through early 2022, reflecting consistent liquidity excluding inventory.

Cash Ratio

The cash ratio generally remains low and steady over the reporting periods, typically between 0.17 and 0.29 from 2017 through early 2019, indicating limited cash and cash equivalents relative to current liabilities. It also exhibits a marked increase to 4.11 in June 2019, paralleling the spikes in the other liquidity ratios. After this event, the cash ratio significantly declines and stabilizes at very low levels around 0.05 to 0.07 through March 2022, suggesting a more conservative cash position in relation to short-term liabilities in recent periods.

General Observations

Overall, liquidity ratios demonstrate stability across most periods with a notable and singular large spike in all three ratios during June 2019. The consistency post-spike suggests that the event may have been extraordinary or related to accounting adjustments rather than an ongoing change in liquidity strategy. The persistent lower cash ratio relative to the current and quick ratios indicates that cash and equivalents constitute a smaller portion of current assets, with other assets contributing to liquidity. The ratios imply the company maintained a generally balanced liquidity position, sufficient to cover short-term obligations without excessive cash holdings.

The analysis of the quarterly financial data reveals several notable trends in the liquidity position over the observed periods.

Current Assets

Current assets demonstrate a generally increasing trend with some fluctuations. Starting from $1,615 million in March 2017, there is a steady growth until the end of 2017. A significant surge is observed in June 2019, where current assets spike to $10,209 million and peak at $17,991 million in September 2019. After that peak, current assets experience variability, decreasing to $12,933 million in March 2020, followed by a recovery to figures around $16,000 to $18,000 million through 2021 and early 2022, showing some periods of both increase and slight decline.

Current Liabilities

Current liabilities exhibit a pattern somewhat aligned with current assets but with notable changes in magnitude. Initial values range near $1,700 to $1,900 million from early 2017 through 2018. A dramatic jump occurs in September 2019, where liabilities reach $16,661 million, peaking at $16,727 million by the end of 2019. Subsequently, liabilities decrease sharply to about $12,119 million in March 2020, then fluctuate again toward the $15,000 - $18,000 million range in 2021 and early 2022, generally maintaining a level slightly above or comparable to current assets during these periods.

Current Ratio

The current ratio remains close to parity during the early periods, staying just below or near 1.0 until mid-2018, indicating a balance between current assets and liabilities. A remarkable outlier occurs in June 2019, with a current ratio of 4.97, reflecting a temporary surge in current assets relative to liabilities. Excluding this anomaly, the ratio stabilizes mostly between 1.03 and 1.11 over the rest of the period, suggesting a modestly healthy liquidity position with assets slightly exceeding liabilities on a short-term basis.

Overall, the financial data indicates a dynamic liquidity environment with a few substantial swings, particularly around mid-2019. The temporary spike in current assets and liabilities during this period suggests unusual activity or accounting adjustments impacting the balance sheet. However, excluding this period, the company maintains relatively consistent liquidity ratios slightly above 1, which demonstrates a stable capacity to cover short-term obligations. The consistency of the current ratio in the latter periods suggests effective management of working capital despite fluctuations in absolute asset and liability amounts.

The analysis of the quarterly financial data over the period from March 31, 2017, to March 31, 2022, reveals several notable trends in liquidity, specifically focusing on total quick assets, current liabilities, and the quick ratio.

Total Quick Assets

Total quick assets exhibit considerable fluctuations throughout the period. Initial values between 2017 and 2018 fluctuate modestly around 1,100 to 1,600 million USD. A pronounced spike is observed in mid-2019, with values escalating sharply from approximately 1,500 million USD in early 2019 to over 9,400 million USD in June 2019, peaking at about 16,661 million USD in September 2019. Following this surge, total quick assets decrease but remain elevated compared to pre-2019 levels, generally ranging between approximately 11,800 and 17,300 million USD through early 2022. This indicates a significant increase in liquid assets starting in 2019, which stabilizes at a higher level subsequently.

Current Liabilities

Current liabilities demonstrate a less volatile pattern but mirror some of the variability observed in quick assets. Starting around 1,790 million USD in March 2017, liabilities initially rise gradually to near 2,000 million USD by late 2017. A substantial increase occurs by mid-2019, with current liabilities abruptly climbing to approximately 16,661 million USD in September 2019, followed by a relative decline yet maintaining elevated levels compared to previous years. The period from 2020 onward shows liabilities generally staying between 12,000 and 18,000 million USD, indicating an overall increase in short-term obligations since 2019.

Quick Ratio

The quick ratio remains relatively stable around 0.65 to 0.75 from 2017 through 2018, indicating a moderate coverage of current liabilities by quick assets during this time frame. In mid-2019, an extraordinary spike occurs, with the ratio reaching as high as 4.59 in March 2019, followed by a sharp correction to around 1.00 in mid-2019 and early 2020. Post-2019, the quick ratio stabilizes close to 0.95, showing consistent liquidity coverage slightly below the ideal 1:1 threshold but significantly improved compared to pre-2019 levels. This suggests a marked enhancement in liquidity position and a more balanced relationship between liquid assets and short-term liabilities in recent years.

In summary, the data indicate a substantial transformation in liquidity components beginning in mid-2019, characterized by a dramatic increase in total quick assets and current liabilities, alongside a pronounced peak and eventual stabilization of the quick ratio near parity. This pattern suggests a strategic shift or event around 2019 that impacted both asset liquidity and short-term obligations, resulting in a stronger liquidity position sustained through the subsequent quarters up to the first quarter of 2022.

Total Cash Assets

Total cash assets displayed a generally fluctuating pattern over the observed periods. Initial values in 2017 ranged from $299 million to $382 million, followed by a noticeable increase at the end of 2018 reaching $673 million in September 2018. A significant peak is evident in mid-2019, with cash assets rising sharply to $8,441 million in June 2019, continuing to increase to a high of $1,028 million in September 2019 before declining to levels closer to earlier periods by the end of 2019 and through 2020. Subsequently, cash assets stabilized in a narrower band between approximately $831 million and $937 million from 2020 through the first quarter of 2022.

Current Liabilities

Current liabilities exhibited a rising trend in the early periods of 2017 and 2018, increasing gradually from $1,707 million in June 2017 to $2,320 million in September 2018. A dramatic spike occurred in the third quarter of 2019, with current liabilities surging to $16,661 million in September 2019 and slightly decreasing but remaining elevated at $15,727 million in December 2019. Throughout 2020 and into 2021 and early 2022, current liabilities showed fluctuations but maintained relatively high levels, ranging from about $12,119 million in March 2020 to a peak near $18,295 million in December 2021, ending at $17,730 million in the first quarter of 2022.

Cash Ratio

The cash ratio, which measures the liquidity position relative to current liabilities, was stable and low around 0.17 to 0.23 during 2017 and most of 2018. A significant outlier occurs in mid-2019 where the ratio spikes sharply to 4.11 in June 2019, corresponding with the spike in cash assets, before plummeting back to values close to 0.06 in the following quarters. From late 2019 onwards and through early 2022, the cash ratio remained consistently low, fluctuating modestly between 0.05 and 0.07, indicating limited liquid asset coverage relative to current liabilities during this period.

Overall Analysis

The data reveals a pronounced liquidity event around mid-2019, marked by spikes in both total cash assets and current liabilities, and an exceptional increase in the cash ratio. This suggests an unusual financial occurrence during this period, possibly related to a major transaction or restructuring. Post-2019, total cash assets and current liabilities settled into higher but stable ranges compared to the pre-2019 period, with liquidity ratios indicating a lower relative level of cash coverage of short-term obligations. The persistent higher level of liabilities coupled with stable cash assets suggests increased reliance on other forms of current asset liquidity or financing to meet short-term obligations in recent periods.