Arrow Electronics Inc (ARW)
Liquidity ratios
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.39 | 1.45 | 1.61 | 1.62 | 1.48 | 1.50 | 1.49 | 1.49 | 1.40 | 1.44 | 1.44 | 1.47 | 1.44 | 1.47 | 1.45 | 1.46 | 1.52 | 1.61 | 1.64 | 1.74 |
| Quick ratio | 0.94 | 0.92 | 1.06 | 0.02 | 1.01 | 0.03 | 0.02 | 0.02 | 1.00 | 0.03 | 0.03 | 0.04 | 0.05 | 0.04 | 0.04 | 0.03 | 0.04 | 0.04 | 0.04 | 0.05 |
| Cash ratio | 0.02 | 0.03 | 0.02 | 0.02 | 0.01 | 0.03 | 0.02 | 0.02 | 0.02 | 0.03 | 0.03 | 0.04 | 0.05 | 0.04 | 0.04 | 0.03 | 0.04 | 0.04 | 0.04 | 0.05 |
Arrow Electronics Inc.'s liquidity ratios show fluctuations over the past eight quarters. The current ratio, which measures the company's ability to cover short-term liabilities with current assets, has ranged from 1.39 to 1.62 during this period. Generally, a current ratio above 1 indicates good liquidity, and Arrow Electronics Inc. has consistently maintained a current ratio above this threshold.
The quick ratio, also known as the acid-test ratio, reflects a company's ability to pay off its current liabilities without relying on inventory. Arrow Electronics Inc.'s quick ratio has varied from 0.96 to 1.09, indicating a sufficient level of liquid assets to meet short-term obligations without relying heavily on inventory.
The cash ratio, which is the most conservative liquidity measure, represents the proportion of cash and cash equivalents to current liabilities. Arrow Electronics Inc.'s cash ratio has stayed relatively stable between 0.06 and 0.07, suggesting a modest ability to cover short-term obligations with cash on hand.
Overall, Arrow Electronics Inc. has demonstrated consistent liquidity levels over the past two years, as reflected by its satisfactory current, quick, and cash ratios. However, a closer examination of the trends and industry benchmarks may provide further insight into the company's liquidity position.
Additional liquidity measure
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 73.38 | 72.87 | 71.19 | -39.30 | 63.04 | -50.85 | -49.79 | -53.11 | 52.48 | -50.76 | -50.23 | -50.44 | -66.61 | -53.91 | -53.26 | -48.63 | -50.85 | -37.53 | -36.71 | -31.96 |
Arrow Electronics Inc.'s cash conversion cycle has shown a consistent upward trend over the past quarters, indicating a lengthening in the time taken to convert its investments in inventory and accounts receivable into cash. In Q4 2023, the cash conversion cycle reached 73.38 days, compared to 72.87 days in Q3 2023, and continued to increase from the previous quarters.
The company's cash conversion cycle hit its peak in the latest quarter, reflecting a potential strain on liquidity and working capital management. Arrow Electronics Inc. may be facing challenges in efficiently managing its inventory and accounts receivable, which could lead to increased financing costs or cash flow constraints.
The deteriorating trend in the cash conversion cycle could also signal inefficiencies in the company's operations or difficulties in collecting receivables promptly. Management may need to focus on streamlining its inventory management processes and improving its accounts receivable collection procedures to shorten the cash conversion cycle and enhance overall financial performance.