Cohu Inc (COHU)

Cohu Inc's liquidity ratios have shown a positive trend over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has been consistently increasing, reaching 6.18 in 2023 from 2.95 in 2019. This indicates that Cohu Inc has a strong ability to meet its short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Cohu Inc's quick ratio has also shown significant improvement, increasing from 1.05 in 2019 to 3.25 in 2023. This suggests that the company has a sufficient amount of highly liquid assets to cover its short-term liabilities.

The cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, has followed a similar positive trend, increasing from 1.05 in 2019 to 3.25 in 2023. This indicates that Cohu Inc has a strong cash position relative to its short-term obligations.

Overall, Cohu Inc's liquidity ratios paint a picture of a company with improving liquidity position and a strong ability to meet its short-term obligations. This trend is generally positive and suggests that the company is managing its financial resources effectively.

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Additional liquidity measure

The cash conversion cycle of Cohu Inc has shown fluctuations over the past five years. In 2023, the cash conversion cycle increased to 88.39 days from 72.65 days in 2022. This indicates that it took Cohu Inc longer to convert its investments in inventory back into cash during 2023 compared to the previous year. However, the cash conversion cycle in 2023 is still higher than in 2021, when it stood at 41.64 days, indicating a longer cash conversion cycle.

It is important to note that a longer cash conversion cycle may imply inefficiencies in managing inventory, collecting receivables, and paying off payables, which can tie up cash and impact liquidity. The trend of increasing cash conversion cycle over the past two years raises a concern about Cohu Inc's working capital management efficiency.

Further analysis is required to understand the specific drivers behind the changes in the cash conversion cycle and to assess the impact on Cohu Inc's overall financial performance and liquidity position.