CEVA Inc (CEVA)

Based on the liquidity ratios of CEVA Inc provided for the years 2019 to 2023, we can assess the company's ability to meet its short-term obligations and manage its short-term liquidity effectively.

1. Current Ratio:
The current ratio measures the company's ability to pay off its short-term liabilities with its current assets. Higher current ratios generally indicate better liquidity. CEVA Inc's current ratio has shown a fluctuating trend over the years, ranging from 5.33 to 7.79. The current ratio has been consistently above 5, which suggests that the company has ample current assets to cover its short-term obligations.

2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. CEVA Inc's quick ratio has also exhibited fluctuations but has consistently remained above 4, indicating a strong ability to meet short-term liabilities without relying on inventory sales.

3. Cash Ratio:
The cash ratio is the most stringent liquidity ratio, focusing solely on a company's ability to cover its short-term liabilities with cash and cash equivalents. CEVA Inc's cash ratio has also shown variability but has generally remained above 3, indicating a healthy cash position to cover short-term obligations.

In summary, CEVA Inc's liquidity ratios, including the current ratio, quick ratio, and cash ratio, suggest that the company has maintained a strong liquidity position over the years. The ratios consistently indicate that CEVA Inc has ample liquid assets to meet its short-term financial commitments, which is a positive indication of the company's financial health and ability to navigate short-term challenges.

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Additional liquidity measure

The cash conversion cycle of CEVA Inc has exhibited fluctuations over the past five years. In 2023, the company's cash conversion cycle increased significantly to 77.39 days compared to the previous year, indicating a longer period for CEVA to convert its investments in inventory and other resources back into cash. This may suggest potential liquidity challenges or inefficiencies in managing working capital.

In 2022, the cash conversion cycle improved to 36.59 days, reflecting a more efficient cash management process compared to 2021 when the cycle was 49.89 days. This improvement may indicate better inventory management, faster receivables collections, or extended payables terms, leading to a shorter cycle and potentially improved cash flow.

In 2020 and 2019, CEVA experienced relatively longer cash conversion cycles of 83.24 days and 93.23 days, respectively. These extended cycles may signal delays in converting investments into cash, potentially impacting the company's ability to meet short-term obligations or invest in growth opportunities.

Overall, analyzing the trend in CEVA's cash conversion cycle can provide insights into the company's working capital management efficiency, liquidity position, and operational effectiveness. fluctuations in the cycle over the years may necessitate further investigation into the underlying factors driving these changes and potential strategies for optimization.