ADEIA CORP (ADEA)

The liquidity ratios of ADEIA CORP have shown some fluctuations over the last four years. Starting with the current ratio, we observe a downward trend from 2.74 in 2021 to 1.55 in 2022 before improving to 2.02 in 2023. This ratio measures the company's ability to cover its short-term obligations with its current assets. A higher current ratio indicates a stronger liquidity position. ADEIA CORP maintained a current ratio above 1 in all years, suggesting that it had sufficient current assets to cover its current liabilities.

Looking at the quick ratio, we see a similar trend with fluctuations over the years. The quick ratio also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventories from current assets. ADEIA CORP's quick ratio ranged from 1.50 in 2022 to 2.27 in 2020. Again, the company managed to keep its quick ratio above 1 throughout the years, indicating a relatively healthy liquidity position.

The cash ratio, which is the most conservative liquidity measure as it only considers cash and cash equivalents, shows a decreasing trend from 1.16 in 2020 to 0.71 in 2022, before slightly increasing to 0.88 in 2023. A cash ratio above 1 implies that the company has enough cash to cover its current liabilities. Despite the fluctuations, ADEIA CORP's cash ratio remained below 1 in all years, indicating a lower level of liquidity compared to the current and quick ratios.

Overall, ADEIA CORP maintained acceptable liquidity levels throughout the years, as all three ratios were generally above industry benchmarks and the threshold of 1. However, the decreasing trend in the cash ratio warrants attention, and the company may need to ensure it has sufficient cash reserves to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle of ADEIA CORP has shown fluctuations over the past four years. In 2023, the company's cash conversion cycle decreased to 102.84 days from 104.72 days in 2022, which indicates that the company is managing its cash more efficiently. However, when compared to 2021 and 2020, where the cash conversion cycle was significantly higher at 209.22 days and 173.31 days respectively, there seems to have been some improvement in cash management efficiency.

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales. A lower cash conversion cycle suggests that the company is able to collect cash from its sales quickly, which is favorable as it indicates strong liquidity and efficient working capital management.

Overall, ADEIA CORP has made progress in managing its cash conversion cycle more effectively in 2023 compared to previous years, which could lead to improved cash flow and financial performance. Monitoring and further optimizing the cash conversion cycle will be crucial for the company to sustain its financial health and operational efficiency.