ADEIA CORP (ADEA)

ADEIA CORP's liquidity ratios indicate a healthy liquidity position over the years. The current ratio, which measures the company's ability to cover short-term liabilities with current assets, improved from 2.43 in 2020 to 3.53 in 2024, showing a generally positive trend. The quick ratio, a more stringent measure of liquidity excluding inventory, also demonstrated improvement from 2.27 in 2020 to 3.46 in 2024. Furthermore, the cash ratio, highlighting the most liquid assets available to cover current liabilities, increased from 1.16 in 2020 to 1.57 in 2024. Overall, these ratios suggest that ADEIA CORP has a strong ability to meet its short-term obligations with its current liquid assets.

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Additional liquidity measure

The cash conversion cycle of ADEIA CORP has exhibited fluctuations over the past five years. In December 2020, the cash conversion cycle stood at 173.31 days, indicating that it took the company this long to convert its investments in inventory and accounts receivable into cash inflows from sales.

By the end of December 2021, the cycle extended to 209.22 days, suggesting a longer period required to convert investments into cash. This increase may be attributed to factors such as delays in collections from customers or inefficiencies in managing inventory levels.

In contrast, by December 2022, the cash conversion cycle decreased significantly to 104.72 days, signaling an improvement in the company's operating efficiency. This could imply better inventory management or quicker collections, enabling the company to free up cash sooner in its operating cycle.

Further improvement was observed by December 2023, with the cycle further declining to 89.85 days. This continued trend suggests enhanced liquidity management and a more streamlined conversion process from investments to cash.

However, by December 2024, the cash conversion cycle increased to 118.51 days, indicating a moderate lengthening compared to the previous year. It is crucial for ADEIA CORP to analyze the underlying reasons for this change and implement strategies to mitigate any potential inefficiencies in the cash conversion process.

In conclusion, the fluctuations in ADEIA CORP's cash conversion cycle over the five-year period highlight the importance of closely monitoring working capital management to ensure optimal efficiency and liquidity within the business operations.