Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
HP Inc., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2019-07-31), 10-Q (reporting date: 2019-04-30), 10-Q (reporting date: 2019-01-31), 10-K (reporting date: 2018-10-31), 10-Q (reporting date: 2018-07-31), 10-Q (reporting date: 2018-04-30), 10-Q (reporting date: 2018-01-31), 10-K (reporting date: 2017-10-31), 10-Q (reporting date: 2017-07-31), 10-Q (reporting date: 2017-04-30), 10-Q (reporting date: 2017-01-31), 10-K (reporting date: 2016-10-31), 10-Q (reporting date: 2016-07-31), 10-Q (reporting date: 2016-04-30), 10-Q (reporting date: 2016-01-31), 10-K (reporting date: 2015-10-31), 10-Q (reporting date: 2015-07-31), 10-Q (reporting date: 2015-04-30), 10-Q (reporting date: 2015-01-31), 10-K (reporting date: 2014-10-31), 10-Q (reporting date: 2014-07-31), 10-Q (reporting date: 2014-04-30), 10-Q (reporting date: 2014-01-31).
- Current Ratio
- The current ratio shows a declining trend over the observed periods. Starting near 1.16 in early 2014, it fluctuated slightly but generally decreased, reaching approximately 0.8 by mid-2019. Notably, there was a drop below 1.0 beginning in 2016, indicating a decrease in current assets relative to current liabilities. This suggests a reduction in the company's short-term liquidity over time.
- Quick Ratio
- The quick ratio also exhibited a downward trajectory throughout the analyzed timeframe. Beginning around 0.75 in early 2014, it experienced small variations but consistently declined, falling below 0.5 starting in 2016 and reaching a low near 0.35 by early 2019 before a slight recovery to 0.42. This reduction indicates that the company's most liquid assets, excluding inventories, became less sufficient to cover current liabilities, implying diminished immediate liquidity.
- Cash Ratio
- The cash ratio displayed the most pronounced decline among the liquidity metrics reported. From approximately 0.37 in early 2014, the ratio steadily decreased, dipping below 0.3 in 2015 and further declining to values near 0.14 to 0.20 by early 2019. This indicates a significant reduction in available cash or cash equivalents relative to current liabilities, suggesting a more constrained cash position in recent periods.
Current Ratio
HP Inc., current ratio calculation (quarterly data)
| Jul 31, 2019 | Apr 30, 2019 | Jan 31, 2019 | Oct 31, 2018 | Jul 31, 2018 | Apr 30, 2018 | Jan 31, 2018 | Oct 31, 2017 | Jul 31, 2017 | Apr 30, 2017 | Jan 31, 2017 | Oct 31, 2016 | Jul 31, 2016 | Apr 30, 2016 | Jan 31, 2016 | Oct 31, 2015 | Jul 31, 2015 | Apr 30, 2015 | Jan 31, 2015 | Oct 31, 2014 | Jul 31, 2014 | Apr 30, 2014 | Jan 31, 2014 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||
| Current assets | 19,683) | 18,285) | 18,936) | 21,387) | 21,776) | 19,433) | 21,217) | 22,318) | 21,443) | 18,302) | 17,775) | 18,468) | 17,402) | 15,385) | 15,155) | 51,787) | 51,998) | 48,883) | 48,198) | 50,145) | 49,287) | 49,883) | 50,684) | |||||||
| Current liabilities | 24,579) | 23,203) | 24,199) | 25,131) | 25,506) | 23,127) | 23,349) | 22,412) | 22,060) | 18,604) | 18,587) | 18,808) | 18,114) | 16,862) | 16,761) | 42,191) | 49,033) | 43,186) | 42,529) | 43,735) | 42,476) | 43,280) | 43,611) | |||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||||
| Current ratio1 | 0.80 | 0.79 | 0.78 | 0.85 | 0.85 | 0.84 | 0.91 | 1.00 | 0.97 | 0.98 | 0.96 | 0.98 | 0.96 | 0.91 | 0.90 | 1.23 | 1.06 | 1.13 | 1.13 | 1.15 | 1.16 | 1.15 | 1.16 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Current Ratio, Competitors2 | ||||||||||||||||||||||||||||||
| Apple Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Arista Networks Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Cisco Systems Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Dell Technologies Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Super Micro Computer Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2019-07-31), 10-Q (reporting date: 2019-04-30), 10-Q (reporting date: 2019-01-31), 10-K (reporting date: 2018-10-31), 10-Q (reporting date: 2018-07-31), 10-Q (reporting date: 2018-04-30), 10-Q (reporting date: 2018-01-31), 10-K (reporting date: 2017-10-31), 10-Q (reporting date: 2017-07-31), 10-Q (reporting date: 2017-04-30), 10-Q (reporting date: 2017-01-31), 10-K (reporting date: 2016-10-31), 10-Q (reporting date: 2016-07-31), 10-Q (reporting date: 2016-04-30), 10-Q (reporting date: 2016-01-31), 10-K (reporting date: 2015-10-31), 10-Q (reporting date: 2015-07-31), 10-Q (reporting date: 2015-04-30), 10-Q (reporting date: 2015-01-31), 10-K (reporting date: 2014-10-31), 10-Q (reporting date: 2014-07-31), 10-Q (reporting date: 2014-04-30), 10-Q (reporting date: 2014-01-31).
1 Q3 2019 Calculation
Current ratio = Current assets ÷ Current liabilities
= 19,683 ÷ 24,579 = 0.80
2 Click competitor name to see calculations.
- Current Assets
- The current assets exhibit a notable decline from early 2014 through early 2016, dropping from approximately 50,684 million USD to around 15,155 million USD. Following this period, a recovery trend is observed, with values increasing steadily until reaching a peak in late 2017 at approximately 22,318 million USD. Afterward, the current assets trend downward again, with some fluctuations, ending at about 19,683 million USD by mid-2019.
- Current Liabilities
- Current liabilities show a similar pattern to current assets but with some variability. The values remain relatively stable around 43,000 million USD from early 2014 to late 2015. A sharp decrease occurs in early 2016 to approximately 16,761 million USD, after which there is a gradual increase with some fluctuations. By mid-2019, current liabilities have increased to nearly 24,579 million USD, suggesting a rise in short-term obligations compared to the earlier years.
- Current Ratio
- The current ratio starts at slightly above 1.1 in 2014 and remains relatively stable until late 2015, with values generally exceeding 1, indicating sufficient short-term liquidity. From early 2016 onwards, the current ratio declines below 1, reaching lows around 0.78 by early 2019. This overall downward trend suggests a weakening liquidity position over the observed period, with current liabilities growing faster relative to current assets, possibly indicating increased pressure on the company's ability to cover short-term obligations.
- Summary
- Overall, the data reveals initial high levels of current assets and liabilities in 2014, followed by a significant contraction in early 2016. Subsequent periods show a recovery in current assets and a gradual increase in current liabilities. However, the sustained decline in the current ratio below 1 from 2016 onward points to a potential liquidity risk. The patterns suggest the company may have been managing a tighter working capital situation in the latter years, which warrants further monitoring to ensure continued short-term financial stability.
Quick Ratio
HP Inc., quick ratio calculation (quarterly data)
| Jul 31, 2019 | Apr 30, 2019 | Jan 31, 2019 | Oct 31, 2018 | Jul 31, 2018 | Apr 30, 2018 | Jan 31, 2018 | Oct 31, 2017 | Jul 31, 2017 | Apr 30, 2017 | Jan 31, 2017 | Oct 31, 2016 | Jul 31, 2016 | Apr 30, 2016 | Jan 31, 2016 | Oct 31, 2015 | Jul 31, 2015 | Apr 30, 2015 | Jan 31, 2015 | Oct 31, 2014 | Jul 31, 2014 | Apr 30, 2014 | Jan 31, 2014 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||
| Cash and cash equivalents | 4,919) | 3,556) | 3,367) | 5,166) | 6,195) | 4,247) | 5,475) | 6,997) | 6,967) | 6,223) | 6,331) | 6,288) | 5,636) | 4,636) | 3,688) | 17,433) | 17,171) | 14,768) | 12,919) | 15,133) | 14,474) | 15,096) | 16,165) | |||||||
| Accounts receivable, net | 5,295) | 5,414) | 5,113) | 5,113) | 4,615) | 4,605) | 4,396) | 4,414) | 4,233) | 3,771) | 3,478) | 4,114) | 4,008) | 3,884) | 4,114) | 13,363) | 12,753) | 12,320) | 12,295) | 13,832) | 14,198) | 14,288) | 13,492) | |||||||
| Financing receivables | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | 2,918) | 2,804) | 2,842) | 2,907) | 2,946) | 3,130) | 3,112) | 3,054) | |||||||
| Total quick assets | 10,214) | 8,970) | 8,480) | 10,279) | 10,810) | 8,852) | 9,871) | 11,411) | 11,200) | 9,994) | 9,809) | 10,402) | 9,644) | 8,520) | 7,802) | 33,714) | 32,728) | 29,930) | 28,121) | 31,911) | 31,802) | 32,496) | 32,711) | |||||||
| Current liabilities | 24,579) | 23,203) | 24,199) | 25,131) | 25,506) | 23,127) | 23,349) | 22,412) | 22,060) | 18,604) | 18,587) | 18,808) | 18,114) | 16,862) | 16,761) | 42,191) | 49,033) | 43,186) | 42,529) | 43,735) | 42,476) | 43,280) | 43,611) | |||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||||
| Quick ratio1 | 0.42 | 0.39 | 0.35 | 0.41 | 0.42 | 0.38 | 0.42 | 0.51 | 0.51 | 0.54 | 0.53 | 0.55 | 0.53 | 0.51 | 0.47 | 0.80 | 0.67 | 0.69 | 0.66 | 0.73 | 0.75 | 0.75 | 0.75 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Quick Ratio, Competitors2 | ||||||||||||||||||||||||||||||
| Apple Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Arista Networks Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Cisco Systems Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Dell Technologies Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Super Micro Computer Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2019-07-31), 10-Q (reporting date: 2019-04-30), 10-Q (reporting date: 2019-01-31), 10-K (reporting date: 2018-10-31), 10-Q (reporting date: 2018-07-31), 10-Q (reporting date: 2018-04-30), 10-Q (reporting date: 2018-01-31), 10-K (reporting date: 2017-10-31), 10-Q (reporting date: 2017-07-31), 10-Q (reporting date: 2017-04-30), 10-Q (reporting date: 2017-01-31), 10-K (reporting date: 2016-10-31), 10-Q (reporting date: 2016-07-31), 10-Q (reporting date: 2016-04-30), 10-Q (reporting date: 2016-01-31), 10-K (reporting date: 2015-10-31), 10-Q (reporting date: 2015-07-31), 10-Q (reporting date: 2015-04-30), 10-Q (reporting date: 2015-01-31), 10-K (reporting date: 2014-10-31), 10-Q (reporting date: 2014-07-31), 10-Q (reporting date: 2014-04-30), 10-Q (reporting date: 2014-01-31).
1 Q3 2019 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 10,214 ÷ 24,579 = 0.42
2 Click competitor name to see calculations.
The financial data reveals notable fluctuations and trends in liquidity measures over the analyzed periods.
- Total Quick Assets
- There was a general decline in total quick assets from early 2014 through early 2016, dropping from approximately 32,711 million USD to around 7,802 million USD. This represents a significant contraction in highly liquid assets available to meet immediate obligations. After the decline, total quick assets displayed some recovery and fluctuation, rising to over 11,000 million USD during certain quarters in 2017 and 2018, but generally remaining below the levels seen in 2014. Towards mid to late 2019, the total quick assets stabilized between roughly 8,000 to 10,000 million USD.
- Current Liabilities
- Current liabilities exhibited relative volatility but generally rose from 43,611 million USD in early 2014 down to the low 40,000s in early 2015, then a sharp drop occurred by early 2016 to approximately 16,761 million USD. This decline in liabilities in 2016 is notable alongside the drop in quick assets. From 2016 onward, current liabilities gradually increased again, surpassing 23,000 million USD by mid-2019. The fluctuating pattern indicates shifting short-term obligations which could be influenced by operational or financing activities.
- Quick Ratio
- The quick ratio, representing liquid asset coverage of current liabilities, started at around 0.75 in 2014 and declined gradually to a low near 0.35 by early 2019. This downward trend suggests weakening liquidity over time, indicating a relatively lower buffer of quick assets to cover short-term liabilities as the periods progressed. Despite some small rebounds within certain quarters, the overall trajectory was downward, signaling potential pressure on the company’s immediate financial flexibility.
In summary, the period analyzed reflects a contraction in liquid assets along with a general increase in current liabilities from 2016 onwards, culminating in a reduction in the quick ratio. This signals a decrease in short-term liquidity strength, which may warrant further scrutiny into working capital management and operational cash flows to ensure the company maintains sufficient liquidity to meet forthcoming obligations.
Cash Ratio
HP Inc., cash ratio calculation (quarterly data)
| Jul 31, 2019 | Apr 30, 2019 | Jan 31, 2019 | Oct 31, 2018 | Jul 31, 2018 | Apr 30, 2018 | Jan 31, 2018 | Oct 31, 2017 | Jul 31, 2017 | Apr 30, 2017 | Jan 31, 2017 | Oct 31, 2016 | Jul 31, 2016 | Apr 30, 2016 | Jan 31, 2016 | Oct 31, 2015 | Jul 31, 2015 | Apr 30, 2015 | Jan 31, 2015 | Oct 31, 2014 | Jul 31, 2014 | Apr 30, 2014 | Jan 31, 2014 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||
| Cash and cash equivalents | 4,919) | 3,556) | 3,367) | 5,166) | 6,195) | 4,247) | 5,475) | 6,997) | 6,967) | 6,223) | 6,331) | 6,288) | 5,636) | 4,636) | 3,688) | 17,433) | 17,171) | 14,768) | 12,919) | 15,133) | 14,474) | 15,096) | 16,165) | |||||||
| Total cash assets | 4,919) | 3,556) | 3,367) | 5,166) | 6,195) | 4,247) | 5,475) | 6,997) | 6,967) | 6,223) | 6,331) | 6,288) | 5,636) | 4,636) | 3,688) | 17,433) | 17,171) | 14,768) | 12,919) | 15,133) | 14,474) | 15,096) | 16,165) | |||||||
| Current liabilities | 24,579) | 23,203) | 24,199) | 25,131) | 25,506) | 23,127) | 23,349) | 22,412) | 22,060) | 18,604) | 18,587) | 18,808) | 18,114) | 16,862) | 16,761) | 42,191) | 49,033) | 43,186) | 42,529) | 43,735) | 42,476) | 43,280) | 43,611) | |||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||||
| Cash ratio1 | 0.20 | 0.15 | 0.14 | 0.21 | 0.24 | 0.18 | 0.23 | 0.31 | 0.32 | 0.33 | 0.34 | 0.33 | 0.31 | 0.27 | 0.22 | 0.41 | 0.35 | 0.34 | 0.30 | 0.35 | 0.34 | 0.35 | 0.37 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Cash Ratio, Competitors2 | ||||||||||||||||||||||||||||||
| Apple Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Arista Networks Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Cisco Systems Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Dell Technologies Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Super Micro Computer Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2019-07-31), 10-Q (reporting date: 2019-04-30), 10-Q (reporting date: 2019-01-31), 10-K (reporting date: 2018-10-31), 10-Q (reporting date: 2018-07-31), 10-Q (reporting date: 2018-04-30), 10-Q (reporting date: 2018-01-31), 10-K (reporting date: 2017-10-31), 10-Q (reporting date: 2017-07-31), 10-Q (reporting date: 2017-04-30), 10-Q (reporting date: 2017-01-31), 10-K (reporting date: 2016-10-31), 10-Q (reporting date: 2016-07-31), 10-Q (reporting date: 2016-04-30), 10-Q (reporting date: 2016-01-31), 10-K (reporting date: 2015-10-31), 10-Q (reporting date: 2015-07-31), 10-Q (reporting date: 2015-04-30), 10-Q (reporting date: 2015-01-31), 10-K (reporting date: 2014-10-31), 10-Q (reporting date: 2014-07-31), 10-Q (reporting date: 2014-04-30), 10-Q (reporting date: 2014-01-31).
1 Q3 2019 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 4,919 ÷ 24,579 = 0.20
2 Click competitor name to see calculations.
The financial data presents a multi-year overview of key balance sheet items, specifically total cash assets, current liabilities, and the cash ratio measured quarterly.
- Total Cash Assets
- Total cash assets exhibit a declining trend from early 2014 through early 2016, dropping from a high of over 16 billion USD to below 4 billion USD. There is a noticeable recovery starting mid-2016 with cash assets increasing steadily to nearly 7 billion USD by late 2017. However, after this period, cash assets again decline through 2018 and into early 2019, falling below 3.5 billion USD at their lowest point, before slightly recovering in mid-2019.
- Current Liabilities
- Current liabilities remain relatively high and volatile throughout the observed period. Starting at approximately 43 billion USD in early 2014, they fluctuate between about 42 billion and 49 billion USD through 2015. A sharp decrease is observed at the beginning of 2016, where liabilities drop to around 16-18 billion USD and stabilize at this lower level for several quarters. From 2017 onward, current liabilities gradually increase again, reaching above 24 billion USD by mid-2019.
- Cash Ratio
- The cash ratio, which measures the company's liquidity position by comparing cash to current liabilities, generally declines throughout the period. Initially, the ratio hovers around 0.35, indicating moderate liquidity. There is a temporary improvement in late 2015 when the ratio peaks at 0.41 due to reduced current liabilities and slightly higher cash. From 2016 onwards, despite fluctuations in cash assets and liabilities, the cash ratio trends downward, reaching lows near 0.14 to 0.20 by early to mid-2019. This suggests a weakening liquidity position relative to current obligations towards the end of the period reviewed.
Overall, the data reflects significant volatility in both liquidity and balance sheet structure over the period. The substantial drop in current liabilities and cash assets around 2016 marks a major shift that improves liquidity ratios temporarily. Nevertheless, the subsequent increase in liabilities combined with fluctuating cash resources results in a generally declining cash ratio, indicating potential challenges in maintaining cash reserves sufficient to cover short-term liabilities in later years.