Advanced Micro Devices Inc (AMD)

Liquidity ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Current ratio 2.62 2.50 2.82 2.64 2.51 2.19 2.18 2.38 2.36 2.16 2.44 2.40 2.02 2.24 2.70 2.51 2.54 2.28 2.10 2.21
Quick ratio 1.64 1.58 1.79 1.72 1.83 1.42 1.40 0.90 1.74 1.48 1.82 1.83 1.57 1.64 2.01 1.85 1.85 1.62 1.47 1.65
Cash ratio 0.70 0.61 0.86 0.93 0.86 0.76 0.83 0.90 0.92 0.84 1.08 1.17 0.85 1.01 1.31 1.09 0.95 0.73 0.73 0.70

Advanced Micro Devices Inc has maintained a strong current ratio over the past five years, ranging between 2.02 and 2.82. This indicates the company's ability to cover its short-term obligations with its current assets. The current ratio peaked at 2.82 in June 2024, suggesting a healthy liquidity position during that period.

In terms of the quick ratio, AMD has shown some fluctuation but generally stayed above 1, reflecting its capacity to meet immediate payment requirements without relying on inventory. There was a decline in the quick ratio to 0.90 in March 2023, possibly indicating a temporary liquidity strain, but it recovered thereafter.

The cash ratio, which measures the company's ability to pay off current liabilities with cash and cash equivalents, has also exhibited some variability. The ratio ranged from 0.61 to 1.31 over the past five years, with the highest level in June 2021. This implies that AMD had a sufficient cash reserve to cover its short-term obligations at that time.

Overall, AMD's liquidity ratios demonstrate a generally sound financial position, with adequate liquidity levels to support its operations and meet its short-term financial commitments.

See also:

Advanced Micro Devices Inc Liquidity Ratios (Quarterly Data)

Additional liquidity measure

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Cash conversion cycle days 170.72 166.16 156.28 144.01 147.32 125.78 107.34 34.30 107.83 94.56 98.32 99.92 90.26 88.35 95.18 104.36 135.39 125.65 124.99 127.65

The cash conversion cycle of Advanced Micro Devices Inc has experienced fluctuations over the periods reported, ranging from a low of 34.30 days to a high of 170.72 days. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Analyzing the trend, we observe that the cash conversion cycle initially decreased from March 2020 to September 2021, indicating improvements in managing inventory, receivables, and payables. This suggests that AMD was able to generate cash more efficiently during this period.

However, starting from December 2021, the cash conversion cycle began to increase significantly, reaching its peak at 170.72 days by the end of December 2024. This upward trend can be concerning as it may indicate inefficiencies in managing working capital, potential liquidity challenges, or difficulties in converting investments into cash.

It is important for Advanced Micro Devices Inc to closely monitor and address the factors contributing to the lengthening of the cash conversion cycle to ensure optimal cash flow management and operational efficiency. Potential strategies to improve the cash conversion cycle could include optimizing inventory levels, negotiating favorable payment terms with suppliers, and accelerating the collection of accounts receivables.