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

The financial data reveals notable shifts in liquidity ratios over the examined periods. Initially, all three key liquidity indicators—the current ratio, quick ratio, and cash ratio—demonstrate a generally positive trajectory, followed by a marked decline in more recent quarters.

Current Ratio

From June 2019 through March 2022, the current ratio exhibited an upward trend, increasing from 1.45 to a peak of 1.89 in March 2021 before fluctuating slightly but remaining above 1.6. However, starting at mid-2022, there is a significant decline, with the ratio dropping below 1.0 by June 2022, reaching as low as 0.65 in March 2023. Although some periods post-March 2023 show modest recovery, the ratio consistently remains below 1.0, indicating a shift towards tighter short-term liquidity.

Quick Ratio

The quick ratio follows a similar pattern to the current ratio in the earlier periods, ascending from 1.30 in June 2019 to 1.71 in March 2021. Thereafter, it begins to decline, falling below 1.0 starting in the June 2022 period and reaching its lowest point of 0.54 in March 2023. Partial recovery occurs in subsequent quarters, but the ratio generally remains under 0.75, highlighting diminishing capability to cover immediate liabilities without relying on inventory.

Cash Ratio

Initially, the cash ratio shows moderate fluctuation but remains above 1.0 from June 2019 until March 2022, peaking at 1.47 in June 2021. Beginning June 2022, the ratio decreases sharply, hitting a low of 0.34 by March 2023. Although it experiences slight increases afterwards, the cash ratio stabilizes around 0.4 to 0.5 in recent periods, reflecting a significant reduction in liquid cash reserves relative to current liabilities.

Overall, the data indicates strong liquidity positions extending through early 2022, with gradually strengthening ability to meet short-term obligations as evidenced by ratios exceeding 1.5 in many periods. This favorable condition shifts notably in mid-2022, with all liquidity ratios dropping below the critical threshold of 1.0 for a sustained duration. This downward trend could point to increased current liabilities, reduced current assets, or shifts in asset composition, potentially signaling rising liquidity risk. The partial recoveries observed post-2023 are insufficient to restore prior liquidity levels, suggesting continued pressure on the company's short-term financial flexibility.

The analysis of the quarterly financial data reveals distinct trends in the liquidity position over the observed period. Current assets exhibit an overall fluctuation pattern with periods of growth and decline. Initially, from mid-2019 through early 2021, current assets generally increased, reaching a peak around March 2021. However, from mid-2021 onwards, there is a notable downward trend interspersed with minor recoveries, indicating variability and potential challenges in asset accumulation or management.

Current liabilities also show variability, with initial growth through 2020 and a peak around mid-2022. Following this peak, liabilities decrease somewhat but with intermittent increases, suggesting fluctuating short-term obligations. The substantial spike in current liabilities during mid-2022 aligns with a significant reduction in current assets during the same period.

Examining the current ratio, which measures the company's ability to cover short-term obligations with short-term assets, a clear pattern emerges. From mid-2019 to early 2022, the current ratio remains relatively stable and above 1.0, peaking close to 1.89 in March 2021, indicating a comfortable liquidity position during that time frame. Subsequently, there is a sharp decline starting mid-2022, with the ratio falling below 1.0, reaching lows of approximately 0.65 in March 2023. This downward movement suggests a deterioration in liquidity and an increased risk related to meeting short-term liabilities.

Although minor improvements occur post-March 2023, the current ratio remains below 1.0 through the remainder of the observed period, reflecting ongoing liquidity constraints. These developments warrant attention, as a ratio under 1.0 implies that current liabilities exceed current assets, potentially affecting operational stability.

Current Assets

Displayed an initial upward trend through early 2021, followed by a sustained decline from mid-2021 onward, reaching lower levels by mid-2023. Minor recoveries were noted but did not restore the earlier peaks.

Current Liabilities

Increased from 2019 to mid-2022, peaking significantly in that period before experiencing fluctuations and slight reductions thereafter. Elevated liabilities coincide with declining assets in the same periods.

Current Ratio

Remained healthy and above 1.4 until early 2022, indicating strong liquidity. Subsequently, it dropped sharply to below 1.0, signaling reduced liquidity and potential challenges in covering short-term debts. Partial recovery occurred but without returning to prior favorable levels.

In summary, the company experienced a robust liquidity position up until early 2022, with sufficient current assets relative to liabilities. However, the post-2022 period reflects a weakening liquidity profile characterized by shrinking current assets, rising or fluctuating current liabilities, and a declining current ratio below the critical threshold of 1.0. This suggests a possible strain on the company’s short-term financial flexibility and necessitates monitoring and potentially corrective measures to improve the liquidity stance going forward.

The analyzed financial data reveals several notable trends over the examined quarterly periods. Initially, total quick assets exhibit a general upward trajectory from June 2019 through March 2021, peaking around the early 2021 quarter. This is followed by a notable decline starting around mid-2021 through the most recent period, with fluctuations but an overall decreasing pattern evident by March 2025.

In parallel, current liabilities also demonstrate a rising trend from June 2019, increasing substantially toward mid-2022. These liabilities reach their highest levels around March 2022 and experience significant volatility thereafter, marked by periods of decline and resurgence through to March 2025.

The quick ratio, which represents the company's short-term liquidity by comparing quick assets to current liabilities, follows a distinct pattern. From mid-2019 to early 2022, the ratio remains above 1.3 and peaks near 1.71 in early 2021, suggesting strong liquidity during this period. However, there is a sharp decline starting mid-2022, with the ratio falling below 1.0 and reaching as low as 0.54 by March 2023. Although some partial recovery is observed afterward, the quick ratio remains below 1.0 through the end of the examined periods, indicating a weakening liquidity position and potential short-term financial stress.

Overall, while the company maintained a solid liquidity buffer in the earlier part of the timeline, the subsequent reduction in quick assets combined with rising current liabilities has resulted in a deterioration of the quick ratio. This trend implies a decline in the ability to cover short-term obligations with the most liquid assets and could signal increased liquidity risk in the recent periods.

Total Quick Assets

Increased steadily from mid-2019 through early 2021, then declined progressively with volatility afterward.

Current Liabilities

Rising trend observed through mid-2022, peaking then exhibiting high volatility with no clear sustained decrease.

Quick Ratio

Remained robust and above 1.3 through early 2022, followed by a sharp decline below 1.0 and subsequent moderate fluctuations at low levels.

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

Total Cash Assets

The total cash assets generally increased from June 2019 through March 2021, reaching a peak around 3.27 billion USD. Following this peak, a consistent decline is observed starting mid-2021, dropping to as low as approximately 1.1 billion USD by late 2023. There is some moderate recovery observed in 2024, concluding with about 1.48 billion USD by March 2025. This pattern indicates a significant depletion of cash reserves after early 2021, which could signal increased investments, expenses, or other cash outflows.

Current Liabilities

Current liabilities exhibit a moderately fluctuating pattern, with levels initially around 1.94 billion USD in mid-2019. The values peak multiple times, notably reaching over 3.85 billion USD by March 2023—representing a substantial increase compared to the start period. Although there are fluctuations afterward, liabilities remain generally elevated relative to the earlier years, indicating an increased short-term obligation load over time.

Cash Ratio

The cash ratio, which measures the company's ability to cover current liabilities with cash assets, starts above 1 in mid-2019, indicating a strong liquidity position initially. It increases to a maximum of about 1.47 by mid-2021, which is consistent with the earlier increase in cash assets relative to liabilities. However, after this point, the ratio declines sharply and falls below 0.5 by early 2023, reaching a low of 0.34. This represents a significant deterioration in liquidity, implying that cash on hand covers less than half of the current liabilities. Slight improvements are seen toward early 2025 but the ratio remains below 0.5, suggesting ongoing liquidity pressure.

Overall, the financial data indicates that while cash reserves and liquidity were strong through the first half of the period, there has been a notable decline in cash levels concurrent with rising current liabilities starting mid-2021. The resultant falling cash ratio signals potential challenges in meeting short-term obligations solely with cash, highlighting a possible need for enhanced working capital management or access to additional liquid resources.