Cohu Inc (COHU)

Cohu Inc's liquidity ratios have shown a positive trend over the past five years. Starting with the current ratio, which measures the company's ability to meet its short-term obligations with its current assets, we see a consistent increase from 2.78 in 2020 to 6.27 in 2024. This indicates that Cohu Inc has significantly improved its liquidity position and can cover its current liabilities more than six times with its current assets by the end of 2024.

Moving on to the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, we observe a similar upward trajectory from 0.97 in 2020 to 3.08 in 2024. This signifies that the company has also enhanced its ability to meet its short-term obligations without relying on selling inventory.

Lastly, looking at the cash ratio, which focuses solely on the company's cash and cash equivalents to cover its current liabilities, we see a parallel increase from 0.97 in 2020 to 3.08 in 2024. This indicates that Cohu Inc has substantially bolstered its ability to settle its current obligations solely with its cash reserves.

Overall, the improving trend in Cohu Inc's liquidity ratios, particularly the current ratio, quick ratio, and cash ratio, reflects the company's strengthening liquidity position and enhanced ability to meet its short-term financial obligations effectively.

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Additional liquidity measure

The cash conversion cycle for Cohu Inc has fluctuated over the years. As of December 31, 2020, the company had a cash conversion cycle of 142.80 days, indicating the time it takes for Cohu to convert its investments in inventory and other resources into cash inflows.

By December 31, 2021, the cash conversion cycle improved to 117.51 days, suggesting an enhancement in the efficiency of Cohu's working capital management. However, by December 31, 2022, the cycle increased to 144.61 days, indicating a potential delay in converting assets into cash.

Further, by December 31, 2023, the cash conversion cycle extended to 170.50 days, signifying a potential inefficiency in managing working capital. The trend worsened significantly by December 31, 2024, with a cash conversion cycle of 233.78 days, indicating a more prolonged time frame for Cohu to convert investments into cash.

Overall, the fluctuations in Cohu's cash conversion cycle highlight the importance of effective working capital management to optimize operational efficiency and enhance cash flow generation.