Take-Two Interactive Software Inc. (NASDAQ:TTWO)

Current Ratio

The current ratio displayed a generally stable trend through the first eight quarters, maintaining levels between approximately 1.65 and 1.89. This stability indicates consistent short-term liquidity during this period. However, beginning in the quarter ending June 30, 2022, a notable decline is observed, with the ratio dropping below 1.0 and ranging from 0.65 to 0.94 in subsequent quarters. This shift suggests a weakening ability to cover current liabilities with current assets, signaling a potential tightening of liquidity.

Quick Ratio

Similar to the current ratio, the quick ratio maintained a relatively consistent level around 1.5 to 1.7 during the earlier periods. The trend also turned downward starting in mid-2022, falling below 1.0 and stabilizing between 0.54 and 0.79 initially, then further declining to a range roughly between 0.62 and 0.71 in the most recent quarters. This pattern reflects a reduction in liquid assets relative to current liabilities, excluding inventory, indicating increased liquidity pressure.

Cash Ratio

The cash ratio began at high levels, around 1.19 to 1.47 in the earlier periods, highlighting strong cash and cash equivalents relative to current liabilities. From mid-2022 onward, a significant contraction occurred, with the ratio falling sharply to a range between 0.34 and 0.56 for several quarters. Despite slight recoveries in some later quarters, the ratio remained below 0.5, indicating a marked decrease in immediate liquidity available to meet short-term obligations.

Overall Observations

Across all three liquidity ratios, the data indicates a clear deterioration in short-term financial health starting around mid-2022. Prior to this point, the company maintained a comfortable liquidity position. The decline in current, quick, and cash ratios suggests growing strain on liquid resources and potentially tighter working capital management. This trend warrants further investigation into the company’s current asset composition, liability structure, and cash flow patterns to understand the underlying causes and risks associated with reduced liquidity.

The quarterly financial data reveals notable fluctuations in the company's liquidity position over the observed periods. Current assets exhibit variability with an initial upward trend from the mid-2020 figures, reaching a peak around early 2021, followed by a general decline through late 2022 and into 2023. Subsequent quarters show some recovery in current assets, though levels remain below the earlier peak.

Current liabilities have experienced significant changes, with a gradual increase through 2021, peaking in the third quarter of 2022, then fluctuating with periods of decrease and increase through 2024 and into early 2025. The overall level of current liabilities trends upward in the later periods compared to the earlier years.

The current ratio reflects these dynamics, showing a solid liquidity position above 1.6 from 2020 through early 2022, indicative of sufficient current assets relative to current liabilities during this time. However, from mid-2022 onward, the current ratio falls below 1.0 in several quarters, reaching lows around 0.65 to 0.78, signifying potential liquidity pressure and a reduced ability to cover short-term obligations. Although there is some marginal improvement in the current ratio in select quarters after the lows, it remains below 1.0 overall, signaling ongoing challenges in short-term financial flexibility.

Current Assets

Displayed growth until early 2021, followed by a notable decline through 2022 and mid-2023, with modest recovery attempts that fall short of previous highs.

Current Liabilities

Gradually increased through 2021 and into mid-2022, with peaks occurring in the third quarter of 2022 and fluctuating levels thereafter, trending higher in recent periods relative to earlier years.

Current Ratio

Strong liquidity positions above 1.6 persisted through early 2022; however, a sharp decline after mid-2022 resulted in the ratio falling below the benchmark level of 1.0, indicating increased liquidity risk and diminished capacity to meet short-term liabilities without additional financing or asset liquidation.

Trend in Total Quick Assets

The total quick assets exhibited a fluctuating pattern over the reported periods. Initially, from mid-2020 until early 2021, there was a generally stable or slightly increasing trend, peaking near the first quarter of 2021. Subsequently, the value showed a decline through late 2021 and into 2022, reaching notably lower levels compared to the preceding periods. Although some modest recoveries occurred in certain quarters of 2023 and 2024, the amounts remained significantly below the early 2021 peak, indicating a subdued liquidity position relative to those earlier periods.

Trend in Current Liabilities

Current liabilities demonstrated a more volatile and upward trajectory overall. From mid-2020 through early 2022, liabilities increased noticeably, with a sharp rise around mid-2022. The liability figures peaked in the first quarter of 2023, indicating growing short-term obligations. After a slight decrease through mid-2023 and early 2024, the liabilities surged again in the subsequent quarters, peaking notably in early 2025. This trend suggests increasing short-term financial commitments, which may affect liquidity and working capital management.

Trend in Quick Ratio

The quick ratio, reflecting the company's immediate liquidity, showed a declining trend over the examined timeframe. From a relatively strong position above 1.5 during 2020 and early 2021, the ratio dropped sharply starting in 2022, falling below 1.0 and reaching levels as low as approximately 0.54 in early 2023. Despite minor fluctuations and slight improvements in some quarters of 2023 and 2024, the quick ratio remained below 1, ending around 0.62 in early 2025. This downward trend indicates a diminishing ability to cover current liabilities with liquid assets, signaling potential liquidity risk.

Overall Insights

The combined analysis reveals increasing current liabilities accompanied by decreasing total quick assets, which contributed to a sustained decline in the quick ratio. This suggests a weakening liquidity position over the reported periods. The weakening quick ratio underlines a deteriorating capacity to meet short-term obligations without relying on inventory sales or additional financing. The company's management may need to address this trend to ensure sufficient liquidity and mitigate financial risk in the near term.

Total Cash Assets

The total cash assets exhibited an overall declining trend from mid-2020 through early 2024, beginning at approximately $2.75 billion and dropping to around $1.10 billion by the first quarter of 2024. There was a notable sharp decline between the first quarter of 2022 and the first quarter of 2023, where cash assets decreased from about $2.91 billion to $1.32 billion. After this period, cash assets stabilized somewhat with minor fluctuations, ranging between approximately $1.10 billion and $1.48 billion through early 2025.

Current Liabilities

Current liabilities followed a generally upward trajectory during the observed period, increasing from roughly $2.15 billion in mid-2020 to a peak above $3.85 billion by the end of the first quarter in 2023. This peak was followed by a reduction but current liabilities remained elevated relative to the early years in the series, fluctuating between $2.40 billion and $3.60 billion from mid-2023 through early 2025. The highest liabilities were recorded in the first quarter of 2023, indicating significant short-term obligations at that time.

Cash Ratio

The cash ratio started strong with values above 1.2 in the early periods of 2020 and 2021, indicating a robust liquidity position where cash and cash equivalents sufficiently covered current liabilities. However, from early 2022 onwards, the cash ratio deteriorated sharply, dropping below 0.6 and hitting lows near 0.34 in early 2023. This decline reflects a weakening liquidity position relative to the level of current liabilities. Following the nadir, the ratio showed slight recovery but remained under 0.5 throughout most of 2023 and early 2025, suggesting continued pressure on liquidity and tighter short-term financial flexibility.