Analog Devices Inc (ADI)

Analog Devices Inc's liquidity ratios have shown varying trends over the past five years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has fluctuated but generally remained above 1, indicating sufficient liquidity. The current ratio was lowest in fiscal year 2023 at 1.37 and highest in fiscal year 2022 at 2.02.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also fluctuated over the years. Analog Devices Inc's quick ratio was lowest in fiscal year 2020 at 1.24 and highest in fiscal year 2022 at 1.53. The quick ratio has shown some volatility, suggesting potential variability in the company's ability to quickly cover its short-term obligations.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents to current liabilities, indicates the company's ability to pay off its current liabilities solely with cash on hand. Analog Devices Inc's cash ratio improved from fiscal year 2020 to 2021, reaching its peak at 0.84 in fiscal year 2020. However, the cash ratio declined in fiscal year 2023 before somewhat recovering in the latest fiscal year.

Overall, Analog Devices Inc has generally maintained healthy liquidity levels over the years, as reflected in its current ratio consistently above 1.0 and relatively strong quick ratios. However, the company's cash ratio demonstrates some fluctuations, indicating potential changes in the composition of its current assets. Further analysis would be needed to understand the specific factors driving these fluctuations in the company's liquidity ratios.

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See also:

Analog Devices Inc Liquidity Ratios

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Additional liquidity measure

Analog Devices Inc's cash conversion cycle has fluctuated over the past five years. The company's cash conversion cycle was 102.82 days as of Nov 2, 2024, indicating the average number of days it takes for the company to convert its investments in inventory and other resources into cash from sales and back into cash through collections.

Compared to the previous year, the cash conversion cycle had increased slightly from 97.85 days in 2023. This suggests that the company may have experienced delays in converting its investments into cash during this period.

Looking back further, the cycle was 92.77 days in 2022, 136.43 days in 2021, and 93.19 days in 2020. These fluctuations indicate variations in Analog Devices Inc's efficiency in managing its working capital and operations over the years.

Overall, a lower cash conversion cycle is generally preferred as it indicates that the company is efficiently managing its working capital and converting investments into cash quickly. However, it is essential to assess the reasons behind the fluctuations in the cycle to understand the company's operational efficiency and financial performance accurately.