Altair Engineering Inc (ALTR)

Altair Engineering Inc's liquidity ratios provide insights into the company's ability to meet its short-term obligations.

1. Current Ratio: This ratio measures Altair's ability to cover its current liabilities with its current assets. The trend shows a relatively stable current ratio above 1 from March 2020 to December 2024, indicating that Altair had more than enough current assets to cover its short-term obligations. However, there was a notable decline in the current ratio from March 31, 2023 (1.83) to December 31, 2024 (1.61), suggesting a potential strain in meeting short-term obligations during this period.

2. Quick Ratio: The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also shows a similar trend as the current ratio. There was a decline in the quick ratio from March 31, 2023 (1.26) to December 31, 2024 (1.15), indicating a decrease in Altair's ability to meet its short-term obligations without relying on selling inventory.

3. Cash Ratio: The cash ratio specifically focuses on Altair's ability to cover its current liabilities with cash and cash equivalents. The data reveals a consistent pattern over the years, with Altair maintaining a cash ratio above 1, implying a healthy ability to pay off short-term obligations with readily available cash.

Overall, Altair Engineering Inc appears to have maintained a generally healthy liquidity position based on the current, quick, and cash ratios, with some fluctuations noted over the years. However, the declining trend in the current and quick ratios towards the end of the period may warrant further investigation into the company's short-term liquidity management.

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Additional liquidity measure

The cash conversion cycle for Altair Engineering Inc has demonstrated a significant improvement over time, decreasing from 4.90 days as of March 31, 2020, to 0.00 days by the end of December 31, 2024. This indicates that the company's management of its working capital has become more efficient, leading to a reduction in the time it takes to convert its investments in inventory and receivables into cash.

A decreasing trend in the cash conversion cycle suggests that Altair Engineering Inc has been able to streamline its operations, potentially by managing inventory levels more effectively and improving its accounts receivable collection processes. The ability to convert assets into cash quickly is crucial for maintaining liquidity and financial health.

By achieving a cash conversion cycle of 0.00 days in recent periods, Altair Engineering Inc may have optimized its inventory management, sped up its collection of receivables, and effectively negotiated payment terms with suppliers. This efficiency in working capital management can free up cash for other strategic purposes, such as investments in growth initiatives or debt reduction.

Overall, the trend of decreasing cash conversion cycle indicates positive developments in Altair Engineering Inc's financial management practices, contributing to improved cash flow and potentially enhancing its overall financial performance and stability.