Oracle Corp. (NYSE:ORCL)

Analysis of the liquidity ratios over the reported periods reveals a notable declining trend in Oracle Corp's short-term financial health metrics.

Current Ratio

Initially, the current ratio demonstrated relative strength, ranging between approximately 2.25 and 3.03 from August 2019 through mid-2020, indicating comfortable short-term liquidity. However, from late 2021 onwards, a significant downward trend is observed, with the ratio falling sharply to levels below 1.0 by 2022. This suggests a potential tightening in current asset coverage against current liabilities, which might signal increasing liquidity risk.

Quick Ratio

The quick ratio followed a pattern similar to the current ratio, starting robust, fluctuating near the 2.0 mark before mid-2020, then steadily declining through late 2021 to early 2023. Notably, it dipped below 1.0 from 2022 onward, indicating reduced liquidity when inventory and other less liquid assets are excluded. This corroborates the trend observed in the current ratio and points to diminished ability to meet short-term obligations without relying on inventory sales.

Cash Ratio

The cash ratio also exhibits a parallel decreasing trajectory. Initially above 1.5 until mid-2020, implying substantial immediate liquidity, it progressively decreased to below 0.4 starting from 2022, with only minor short-term recoveries. The consistently low cash ratio in recent periods suggests limited cash and cash equivalents to cover current liabilities, which could affect financial flexibility.

Overall, the data indicates a persistent and marked decline in liquidity ratios from 2021 onwards, with all three ratios falling well below commonly accepted benchmarks for strong liquidity. This pattern may signify increased financial constraints, possible changes in working capital management, or shifts in operational cash flows that warrant closer monitoring. Stakeholders should assess the underlying causes of this deterioration and evaluate any operational or strategic actions being taken to address potential liquidity challenges.

The analysis of the quarterly financial data reveals notable fluctuations and trends in the liquidity position over the examined periods.

Current Assets

The current assets demonstrate significant variability across the quarters. Initially, current assets start at a high level of around 42,384 million US dollars in August 2019, and subsequently decline to a low of 17,561 million US dollars by November 2022. Following this nadir, there is a gradual recovery trend, with current assets rising again to approximately 30,116 million US dollars in February 2025 before slightly declining to 24,579 million US dollars by May 2025.

Current Liabilities

Current liabilities exhibit an overall increasing trend with some periods of volatility. Beginning at 18,875 million US dollars in August 2019, current liabilities fluctuate but tend to escalate, reaching a peak of 34,819 million US dollars in August 2022. After this peak, liabilities remain elevated, generally trending between 22,000 and 32,000 million US dollars up to May 2025, indicating heightened short-term obligations compared to earlier periods.

Current Ratio

The current ratio, which measures short-term liquidity, shows a pronounced decline across the timeline. Starting from a strong liquidity position with ratios above 2.0 (indicative of current assets being more than twice the current liabilities) in the early periods, the ratio sharply drops to below 1.0 after mid-2022. The lowest recorded current ratio is 0.6 in August 2022, suggesting that current liabilities significantly exceeded current assets during that quarter. Post-August 2022, the ratio partially recovers, fluctuating around 0.7 to just above 1.0, signaling continued liquidity constraints but some improvement relative to the lowest point.

Overall, the data suggest a weakening liquidity position over time, predominantly driven by the combination of declining current assets and rising current liabilities. The decline in the current ratio to below 1.0 in recent periods could indicate potential challenges in meeting short-term obligations without further asset changes or financing. The partial recovery of current assets and stabilization of the current ratio after the lowest points may reflect efforts to improve liquidity, but the current ratio remaining consistently below 1.0 in several quarters underscores persistent liquidity risk concerns.

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

Total Quick Assets

The total quick assets demonstrate significant fluctuations over the observed quarters. Initially, the values decreased from approximately 39,524 million USD in August 2019 to a low point near 27,977 million USD in February 2022. This decline was interrupted by some temporary recoveries, such as the peak around 51,963 million USD in May 2021. Following the low in early 2022, the total quick assets experienced further reduction reaching a minimum near 13,547 million USD in November 2022. Thereafter, a moderate recovery phase is observed with assets rising back to a level above 25,000 million USD by February 2025. The pattern indicates volatility with periods of both contraction and expansion in liquid asset holdings.

Current Liabilities

Current liabilities present an overall increasing trend with considerable variation. Starting from 18,875 million USD in August 2019, liabilities generally rose, peaking at over 34,819 million USD in August 2022. After this peak, liabilities showed some decline and fluctuations but remained elevated compared to the early periods, with amounts around 32,643 million USD by May 2025. The increasing trend in liabilities suggests a growing short-term financial obligation burden for the company over the examined time frame.

Quick Ratio

The quick ratio, which measures the company’s ability to cover short-term liabilities with its most liquid assets, shows a declining trend from the beginning to the end of the dataset. Initially, the ratio was above 2.0 in 2019 and early 2020, indicating a strong liquidity position. The ratio peaked at 2.83 in May 2020, reflecting a particularly robust liquidity position during that quarter. However, a consistent downward trend ensues, with the ratio dropping below 1.0 starting from August 2022 and remaining under this critical threshold through to the last reported quarters. The lowest recorded ratios hover around 0.49 and 0.50, indicating liquidity constraints as liquid assets became insufficient to fully cover current liabilities. Slight improvements are seen toward the end of the series but the quick ratio remains below 1.0, signaling continued liquidity risk.

In summary, the liquidity analysis points to increasing current liabilities coupled with a general decline in total quick assets and quick ratio over the longer term. This evolution suggests a weakening short-term financial health and a reduced buffer of liquid assets to meet maturing obligations. While some periods exhibit temporary recoveries in liquidity, the trend toward a quick ratio below 1.0 in more recent quarters could warrant closer attention to cash management and liability structuring by the company.

The financial data reveals notable fluctuations in total cash assets, current liabilities, and the cash ratio over the observed periods. A detailed examination of these trends provides insight into the company's liquidity dynamics and short-term financial position.

Total Cash Assets

Initially, total cash assets exhibited considerable volatility. Beginning at approximately $35.7 billion in August 2019, cash levels decreased to around $25.9 billion by February 2020 before surging to over $43 billion in May 2020. This spike was followed by a gradual decline intermixed with short-term increases, reaching a lower point near $7.35 billion in November 2022. Subsequently, cash balances showed a moderate recovery but remained volatile, with amounts oscillating roughly between $8 billion and $12 billion toward the end of the period, including a significant rise to $17.8 billion in February 2025 before falling back to $11.2 billion in May 2025.

Current Liabilities

Current liabilities demonstrated a generally upward trend over the entire timeframe. Starting at approximately $18.9 billion in August 2019, liabilities rose with some fluctuations and notable increases, peaking at about $34.8 billion in August 2022. Post this peak, current liabilities slightly decreased but remained elevated, fluctuating around $23 billion to $32.6 billion toward the end of the observed periods. This indicates growing obligations and potentially increased short-term financial commitments.

Cash Ratio

The cash ratio, which measures the firm's ability to cover short-term liabilities with its most liquid assets, mirrored the fluctuations seen in cash and liabilities but displayed a marked decline over time. Initially strong, with values around 1.9 from August 2019 through early 2020, the ratio peaked at 2.5 in May 2020, implying a strong liquidity position. However, from late 2021 onwards, the cash ratio consistently declined, dropping below 0.5 by August 2022 and remaining low through the subsequent periods. Values generally fluctuated between 0.27 and 0.6, significantly lower than earlier figures, signifying reduced immediate liquidity coverage of current liabilities.

In summary, total cash assets have experienced substantial decreases after a peak in mid-2020, with intermittent recoveries but presenting a volatile pattern. Meanwhile, current liabilities have generally trended higher, reaching peak levels around mid-2022. Correspondingly, the cash ratio has fallen considerably from a strong liquidity position earlier in the period to ratios far below 1 in recent quarters, highlighting a more constrained ability to meet short-term liabilities solely with cash. This pattern suggests increased reliance on other forms of liquidity or financing and indicates potential pressures on the company’s short-term financial flexibility.