Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Palo Alto Networks Inc., liquidity ratios
Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).
The analysis of the financial ratios over the period ending July 31, 2019 through July 31, 2024 reveals significant shifts in the company's liquidity position.
- Current Ratio
- The current ratio showed a relatively strong level at 1.78 in 2019, increasing slightly to 1.91 in 2020, indicating a comfortable margin of current assets over current liabilities. However, a marked decline occurred starting in 2021 when the ratio fell below 1.0 to 0.91 and further decreased to 0.77 in 2022. It stabilized somewhat thereafter, recording 0.78 in 2023 and rising to 0.89 in 2024. The values below 1.0 suggest that current liabilities exceeded current assets for the majority of the recent period, which may raise concerns about short-term liquidity.
- Quick Ratio
- The quick ratio mirrors the pattern seen in the current ratio, beginning at 1.72 in 2019 and peaking at 1.85 in 2020. It then declined sharply to 0.88 in 2021 and further to 0.75 in 2022. Subsequent periods show a slight decrease to 0.72 in 2023 before recovering to 0.82 in 2024. The quick ratio trend reinforces the indication of tightening liquidity, with quick assets becoming insufficient to cover current liabilities during these years.
- Cash Ratio
- The cash ratio started at a healthy 1.37 in 2019 and remained relatively stable in 2020 at 1.39. From 2021 onwards, there is a clear downward trajectory: dropping to 0.57 in 2021, then 0.44 in 2022, followed by 0.31 in 2023, and a slight increase to 0.34 in 2024. This downward trend indicates diminishing cash and cash equivalents relative to current liabilities, which suggests an increasingly constrained immediate liquidity position.
Overall, the liquidity ratios depict a scenario where the company’s capacity to meet short-term obligations from its liquid assets has weakened considerably since 2021, after a period of stable and strong liquidity through 2020. The improvement noted in 2024, although modest, may indicate early signs of liquidity recovery or management attention to improving cash reserves. Continued monitoring is advisable given the potential risks associated with liquidity below standard benchmark levels.
Current Ratio
Palo Alto Networks Inc., current ratio calculation, comparison to benchmarks
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | Jul 31, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Current assets | 6,849,700) | 6,048,000) | 6,414,900) | 4,647,300) | 5,129,200) | 3,664,800) | |
| Current liabilities | 7,682,700) | 7,737,500) | 8,306,300) | 5,116,700) | 2,691,700) | 2,053,300) | |
| Liquidity Ratio | |||||||
| Current ratio1 | 0.89 | 0.78 | 0.77 | 0.91 | 1.91 | 1.78 | |
| Benchmarks | |||||||
| Current Ratio, Competitors2 | |||||||
| Accenture PLC | 1.10 | 1.30 | 1.23 | 1.25 | 1.40 | 1.40 | |
| Adobe Inc. | 1.07 | 1.34 | 1.11 | 1.25 | 1.48 | 0.79 | |
| Cadence Design Systems Inc. | 2.93 | 1.24 | 1.27 | 1.77 | 1.86 | — | |
| CrowdStrike Holdings Inc. | 1.76 | 1.73 | 1.83 | 2.65 | 2.38 | — | |
| International Business Machines Corp. | 1.04 | 0.96 | 0.92 | 0.88 | 0.98 | — | |
| Intuit Inc. | 1.29 | 1.47 | 1.39 | 1.94 | 2.26 | 1.83 | |
| Microsoft Corp. | 1.27 | 1.77 | 1.78 | 2.08 | 2.52 | 2.53 | |
| Oracle Corp. | 0.72 | 0.91 | 1.62 | 2.30 | 3.03 | — | |
| Palantir Technologies Inc. | 5.96 | 5.55 | 5.17 | 4.34 | 3.74 | — | |
| Salesforce Inc. | 1.09 | 1.02 | 1.05 | 1.23 | 1.08 | — | |
| ServiceNow Inc. | 1.10 | 1.06 | 1.11 | 1.05 | 1.21 | — | |
| Synopsys Inc. | 2.44 | 1.15 | 1.09 | 1.16 | 1.19 | 0.99 | |
| Workday Inc. | 1.97 | 1.75 | 1.03 | 1.12 | 1.04 | — | |
| Current Ratio, Sector | |||||||
| Software & Services | 1.19 | 1.39 | 1.43 | 1.67 | 1.91 | — | |
| Current Ratio, Industry | |||||||
| Information Technology | 1.24 | 1.41 | 1.37 | 1.55 | 1.71 | — | |
Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).
1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= 6,849,700 ÷ 7,682,700 = 0.89
2 Click competitor name to see calculations.
- Current Assets
- Current assets demonstrated an overall increasing trend from 2019 to 2024. Starting at approximately 3.66 billion USD in 2019, the value peaked at around 6.42 billion USD in 2022, experienced a slight decrease in 2023, and then rose again to approximately 6.85 billion USD in 2024. This indicates an expansion of liquid and short-term resources available to the company over the examined period.
- Current Liabilities
- Current liabilities showed a significant growth over the years, rising from about 2.05 billion USD in 2019 to a peak of approximately 8.31 billion USD in 2022. After peaking, there was a minor decline in 2023 and 2024, ending near 7.68 billion USD. The rapid increase in liabilities suggests increased short-term obligations that the company must manage carefully.
- Current Ratio
- The current ratio exhibited a notable decline throughout the period. The ratio started at a healthy 1.78 in 2019 and marginally improved to 1.91 in 2020, indicating strong liquidity. However, from 2021 onwards, the ratio dropped significantly, falling below 1.0 to 0.91, then further declining to 0.77 in 2022 and 0.78 in 2023, with a slight recovery to 0.89 in 2024. A current ratio below 1 indicates that current liabilities exceed current assets, which may raise concerns about short-term financial stability and the ability to meet immediate obligations.
Quick Ratio
Palo Alto Networks Inc., quick ratio calculation, comparison to benchmarks
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | Jul 31, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Cash and cash equivalents | 1,535,200) | 1,135,300) | 2,118,500) | 1,874,200) | 2,958,000) | 961,400) | |
| Short-term investments | 1,043,600) | 1,254,700) | 1,516,000) | 1,026,900) | 789,800) | 1,841,700) | |
| Accounts receivable, net of allowance for credit losses | 2,618,600) | 2,463,200) | 2,142,500) | 1,240,400) | 1,037,100) | 582,400) | |
| Short-term financing receivables, net | 725,900) | 388,800) | 111,300) | 79,000) | —) | —) | |
| Short-term deferred contract costs | 369,000) | 339,200) | 317,700) | 276,500) | 206,000) | 151,100) | |
| Total quick assets | 6,292,300) | 5,581,200) | 6,206,000) | 4,497,000) | 4,990,900) | 3,536,600) | |
| Current liabilities | 7,682,700) | 7,737,500) | 8,306,300) | 5,116,700) | 2,691,700) | 2,053,300) | |
| Liquidity Ratio | |||||||
| Quick ratio1 | 0.82 | 0.72 | 0.75 | 0.88 | 1.85 | 1.72 | |
| Benchmarks | |||||||
| Quick Ratio, Competitors2 | |||||||
| Accenture PLC | 0.98 | 1.18 | 1.12 | 1.14 | 1.29 | 1.29 | |
| Adobe Inc. | 0.95 | 1.22 | 1.00 | 1.11 | 1.34 | 0.70 | |
| Cadence Design Systems Inc. | 2.53 | 1.02 | 1.02 | 1.47 | 1.60 | — | |
| CrowdStrike Holdings Inc. | 1.60 | 1.58 | 1.68 | 2.50 | 2.18 | — | |
| International Business Machines Corp. | 0.90 | 0.82 | 0.76 | 0.69 | 0.83 | — | |
| Intuit Inc. | 0.71 | 1.25 | 1.17 | 1.65 | 2.04 | 1.44 | |
| Microsoft Corp. | 1.06 | 1.54 | 1.57 | 1.90 | 2.33 | 2.35 | |
| Oracle Corp. | 0.59 | 0.74 | 1.43 | 2.15 | 2.83 | — | |
| Palantir Technologies Inc. | 5.83 | 5.41 | 4.92 | 4.11 | 3.59 | — | |
| Salesforce Inc. | 0.96 | 0.90 | 0.93 | 1.11 | 0.95 | — | |
| ServiceNow Inc. | 1.02 | 1.00 | 1.06 | 1.01 | 1.16 | — | |
| Synopsys Inc. | 1.88 | 0.85 | 0.85 | 0.89 | 0.94 | 0.73 | |
| Workday Inc. | 1.87 | 1.66 | 0.96 | 1.07 | 0.95 | — | |
| Quick Ratio, Sector | |||||||
| Software & Services | 1.00 | 1.21 | 1.26 | 1.51 | 1.75 | — | |
| Quick Ratio, Industry | |||||||
| Information Technology | 0.96 | 1.12 | 1.08 | 1.30 | 1.46 | — | |
Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).
1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 6,292,300 ÷ 7,682,700 = 0.82
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets displayed an overall increasing trend from 3,536,600 thousand US dollars in July 2019 to 6,292,300 thousand US dollars in July 2024. There was a notable rise from 3,536,600 in July 2019 to 4,990,900 in July 2020, followed by a decline in the next year to 4,497,000. Subsequently, the quick assets increased significantly to 6,206,000 in July 2022, experienced a slight drop to 5,581,200 in July 2023, and rose again to 6,292,300 by July 2024.
- Current liabilities
- Current liabilities showed a consistent increasing pattern initially, rising from 2,053,300 thousand US dollars in July 2019 to a peak of 8,306,300 in July 2022. After this peak, liabilities decreased marginally to 7,737,500 in July 2023 and further to 7,682,700 in July 2024. The sharpest increase occurred between July 2020 and July 2022, indicating a rapid buildup of short-term obligations during that period.
- Quick ratio
- The quick ratio started at 1.72 in July 2019, slightly improved to 1.85 in July 2020, suggesting a strong liquidity position at that time. However, it sharply declined to 0.88 in July 2021 and further worsened to 0.75 in July 2022. The ratio continued to deteriorate to 0.72 in July 2023 before showing a moderate recovery to 0.82 in July 2024. This decline signals a weakening in the company's ability to cover its current liabilities with its most liquid assets during the middle period, with some signs of stabilization or improvement in the most recent year.
- Overall analysis
- The data reflects a scenario in which quick assets increased over the period, but at a pace insufficient to outgrow the rising current liabilities, especially from 2020 to 2023. The decreasing quick ratio from 2019 to 2023 indicates heightened liquidity risk during these years. Despite improvements in quick assets and a slight reduction in current liabilities post-2022, the liquidity position remains below the levels seen in 2019 and 2020. The recent increase in the quick ratio to 0.82 suggests that measures may have been taken to improve short-term financial health, but the ratio is still below 1.0, implying potential liquidity concerns persist.
Cash Ratio
Palo Alto Networks Inc., cash ratio calculation, comparison to benchmarks
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | Jul 31, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Cash and cash equivalents | 1,535,200) | 1,135,300) | 2,118,500) | 1,874,200) | 2,958,000) | 961,400) | |
| Short-term investments | 1,043,600) | 1,254,700) | 1,516,000) | 1,026,900) | 789,800) | 1,841,700) | |
| Total cash assets | 2,578,800) | 2,390,000) | 3,634,500) | 2,901,100) | 3,747,800) | 2,803,100) | |
| Current liabilities | 7,682,700) | 7,737,500) | 8,306,300) | 5,116,700) | 2,691,700) | 2,053,300) | |
| Liquidity Ratio | |||||||
| Cash ratio1 | 0.34 | 0.31 | 0.44 | 0.57 | 1.39 | 1.37 | |
| Benchmarks | |||||||
| Cash Ratio, Competitors2 | |||||||
| Accenture PLC | 0.26 | 0.50 | 0.45 | 0.52 | 0.67 | 0.55 | |
| Adobe Inc. | 0.75 | 0.95 | 0.75 | 0.84 | 1.09 | 0.51 | |
| Cadence Design Systems Inc. | 2.03 | 0.72 | 0.66 | 1.13 | 1.17 | — | |
| CrowdStrike Holdings Inc. | 1.29 | 1.28 | 1.42 | 2.22 | 1.85 | — | |
| International Business Machines Corp. | 0.45 | 0.39 | 0.28 | 0.22 | 0.36 | — | |
| Intuit Inc. | 0.54 | 0.97 | 0.90 | 1.46 | 2.00 | 1.39 | |
| Microsoft Corp. | 0.60 | 1.07 | 1.10 | 1.47 | 1.89 | 1.93 | |
| Oracle Corp. | 0.34 | 0.44 | 1.12 | 1.93 | 2.50 | — | |
| Palantir Technologies Inc. | 5.25 | 4.93 | 4.48 | 3.83 | 3.33 | — | |
| Salesforce Inc. | 0.53 | 0.48 | 0.48 | 0.67 | 0.54 | — | |
| ServiceNow Inc. | 0.69 | 0.66 | 0.71 | 0.67 | 0.83 | — | |
| Synopsys Inc. | 1.53 | 0.53 | 0.56 | 0.65 | 0.58 | 0.42 | |
| Workday Inc. | 1.55 | 1.32 | 0.72 | 0.83 | 0.65 | — | |
| Cash Ratio, Sector | |||||||
| Software & Services | 0.58 | 0.78 | 0.82 | 1.11 | 1.32 | — | |
| Cash Ratio, Industry | |||||||
| Information Technology | 0.57 | 0.71 | 0.66 | 0.89 | 1.06 | — | |
Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).
1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 2,578,800 ÷ 7,682,700 = 0.34
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets exhibit variability across the analyzed periods. Initially, there is an increase from approximately 2.8 billion US dollars in 2019 to about 3.75 billion in 2020. However, the value declines to roughly 2.9 billion in 2021, rises again to approximately 3.63 billion in 2022, and then decreases to around 2.39 billion in 2023. The latest figure for 2024 shows a moderate recovery to nearly 2.58 billion. Overall, total cash assets demonstrate a pattern of fluctuations without a consistent upward or downward trend.
- Current Liabilities
- Current liabilities present a clear upward trajectory over the examined timeframe. Starting at about 2.05 billion US dollars in 2019, liabilities increase steadily to approximately 2.69 billion in 2020, followed by a substantial rise to around 5.12 billion in 2021. The growth continues sharply in 2022, peaking at roughly 8.31 billion. In 2023 and 2024, liabilities remain relatively stable at approximately 7.74 billion and 7.68 billion respectively. This significant increase indicates an expanding short-term obligation level, which may affect liquidity considerations.
- Cash Ratio
- The cash ratio, reflecting the company's ability to cover current liabilities with cash and cash equivalents, shows a declining trend over the years. It begins at 1.37 in 2019 and remains relatively stable at 1.39 in 2020, indicating strong liquidity during these periods. Subsequently, the ratio decreases sharply to 0.57 in 2021 and continues its decline to 0.44 in 2022. It further drops to a low of 0.31 in 2023 before a slight improvement to 0.34 in 2024. This overall downward movement points to reduced liquidity relative to current liabilities, implying increasing reliance on other forms of assets or financing to meet short-term obligations.