Liquidity Analysis
Analyzing Iomega's ability to meet short-term obligations (1995-2007)
Year 2007
1995-2007
Above 2.0 threshold
Key Findings:
- •1995: Very tight liquidity at 1.06 - minimal safety margin
- •1996-1997: Improved to 1.94 during Zip drive boom
- •2000-2002: Peak liquidity at 2.34-3.71
- •2003-2007: Maintained healthy 2.04-2.17 despite decline
Interpretation: A ratio above 2.0 indicates strong short-term financial health. Iomega maintained this threshold even during its decline phase.
Quick Ratio (Acid Test):
Excludes inventories to show immediate liquidity. Iomega's quick ratio remained strong (1.5-3.0) throughout most periods, indicating ability to pay obligations without selling inventory.
Cash Ratio:
Most conservative measure using only cash. Peaked at 0.87 in 2000-2002 when company held $220-256M in cash. Declined to 0.29-0.58 in final years but still acceptable for tech companies.
Key Takeaway: All three ratios tell the same story - Iomega maintained solid liquidity management even as its business model became obsolete.
| Year | Current Ratio | Quick Ratio | Cash Ratio | Current Assets | Cash |
|---|---|---|---|---|---|
| 1995 | 1.06 | 0.55 | 0.01 | $142.4M | $1.0M |
| 1996 | 1.93 | 1.33 | 0.72 | $525.1M | $196.4M |
| 1997 | 1.94 | 1.26 | 0.54 | $708.1M | $196.4M |
| 1998 | 1.74 | 1.28 | 0.25 | $625.1M | $90.3M |
| 1999 | 1.58 | 1.28 | 0.51 | $530.9M | $172.7M |
| 2000 | 2.34 | 1.98 | 0.87 | $682.4M | $255.6M |
| 2001 | 2.43 | 2.17 | 1.00 | $534.5M | $219.9M |
| 2002 | 3.71 | 3.46 | 1.52 | $590.9M | $241.5M |
| 2003 | 2.11 | 1.92 | 1.00 | $260.2M | $122.6M |
| 2004 | 1.91 | 1.60 | 0.54 | $192.5M | $54.1M |
| 2005 | 1.90 | 1.52 | 0.57 | $166.8M | $49.8M |
| 2006 | 2.04 | 1.57 | 0.58 | $128.1M | $36.4M |
| 2007 | 2.04 | 1.57 | 0.58 | $128.1M | $36.4M |