Amphenol Corporation (APH)

Amphenol Corp.'s liquidity ratios have shown a generally stable trend over the past five years. The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, decreased slightly from 2.42 in 2022 to 2.17 in 2023. Although the current ratio has decreased, it still remains above 2, indicating a healthy liquidity position.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, also experienced a slight decline from 1.64 in 2022 to 1.48 in 2023. Despite the decrease, the quick ratio continues to demonstrate the company's ability to meet its short-term obligations without relying on inventory conversion.

The cash ratio, which specifically focuses on the ability to cover current liabilities with cash and cash equivalents, decreased notably from 0.66 in 2022 to 0.65 in 2023. This decline may signal a slightly lower capacity to meet immediate obligations using cash resources alone.

Overall, Amphenol Corp. maintains a sound liquidity position based on these ratios, with current and quick ratios above 1 and close to or above 2, indicating a strong ability to cover short-term obligations. However, the decrease in the cash ratio suggests a potential need to monitor the company's cash position and management of liquid assets going forward.

---

See also:

Amphenol Corporation Liquidity Ratios

---

Additional liquidity measure

The cash conversion cycle of Amphenol Corp. has shown some variability over the past five years. As of December 31, 2023, the company's cash conversion cycle stood at 111.29 days, indicating that it takes the company approximately 111 days to convert its investments in inventory and other resources into cash from sales.

Comparing this figure to previous years, we can see a slight increase from the previous year, where the cash conversion cycle was 109.40 days. However, it is also worth noting that the cycle in 2023 is higher compared to 2021 and 2020, where it was 110.81 days and 103.84 days, respectively, suggesting a longer period to convert investments into cash.

Analyzing the trend, the cash conversion cycle has been somewhat volatile, with fluctuations in the range of around 105 to 111 days over the last five years. This could indicate variability in the company's efficiency in managing its working capital components, including inventory, accounts receivable, and accounts payable.

Overall, a longer cash conversion cycle may suggest inefficiencies in managing working capital and could potentially lead to increased financing costs. It is essential for Amphenol Corp. to monitor and improve its working capital management to potentially shorten its cash conversion cycle and enhance its cash flow generation capabilities.