Arrow Electronics Inc (ARW)

Arrow Electronics Inc.'s liquidity ratios have shown some fluctuations over the past five years. The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, has slightly decreased from 1.52 in 2019 to 1.39 in 2023. This indicates that the company may have a slightly weaker ability to cover its current liabilities with its current assets in the most recent year.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Arrow Electronics Inc.'s quick ratio has decreased from 1.10 in 2019 to 1.00 in 2023. This decline suggests that the company may have less liquidity available to cover its short-term obligations without relying on selling inventory.

The cash ratio, which indicates the proportion of current liabilities that can be covered by cash and cash equivalents alone, has remained relatively stable around 0.06 to 0.07 over the five-year period. This implies that Arrow Electronics Inc. has maintained a consistent level of cash reserves relative to its current liabilities, which is a positive sign for short-term liquidity.

Overall, the liquidity ratios of Arrow Electronics Inc. show a mixed picture with some declines in the current and quick ratios over the years. However, the company has maintained a relatively stable cash ratio, indicating that it has been able to preserve a sufficient level of cash to cover its short-term obligations. It would be important for Arrow Electronics Inc. to closely monitor its liquidity position and take appropriate measures to ensure it can meet its financial commitments in the future.

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Additional liquidity measure

The cash conversion cycle for Arrow Electronics Inc. has shown a fluctuating trend over the past five years. In 2023, the company's cash conversion cycle increased to 73.38 days from 63.04 days in 2022. This indicates that the company took longer to convert its investments in inventory and accounts receivable into cash during the year.

Compared to 2021, where the cash conversion cycle was 52.48 days, there has been a significant increase in the time it takes for Arrow Electronics Inc. to convert its assets into cash. This suggests that the company may have experienced challenges in managing its working capital efficiently in 2023.

However, it is worth noting that the cash conversion cycle in 2023 is still lower than that of 2019, where it was 56.22 days. This indicates that despite the increase compared to the previous year, Arrow Electronics Inc. has shown an overall improvement in managing its cash conversion cycle over the five-year period.

Overall, the increasing trend in the cash conversion cycle for Arrow Electronics Inc. highlights the importance of closely monitoring the company's working capital management strategies to ensure efficient use of resources and timely conversion of assets into cash.