Cirrus Logic Inc (CRUS)

Cirrus Logic Inc has displayed a consistent trend of strong liquidity ratios over the years, indicating a healthy financial position. The current ratio, which measures the ability to cover short-term obligations with current assets, has improved steadily from 3.94 in March 31, 2021, to 6.35 in March 31, 2025. This indicates that the company has ample current assets to cover its current liabilities.

Similarly, the quick ratio, which provides a more stringent view of liquidity by excluding inventory from current assets, has also shown an upward trend, increasing from 2.84 in March 31, 2021, to 4.16 in March 31, 2025. This suggests that Cirrus Logic Inc can meet its short-term obligations even if inventory is excluded.

Furthermore, the cash ratio, which focuses solely on the ability to cover current liabilities with cash and cash equivalents, has improved significantly from 2.33 in March 31, 2021, to 3.05 in March 31, 2025. This indicates that the company possesses a strong cash position relative to its current liabilities.

Overall, the liquidity ratios of Cirrus Logic Inc reflect a strong financial position with ample liquidity to meet its short-term obligations and fund operational activities.

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Additional liquidity measure

The cash conversion cycle of Cirrus Logic Inc has shown fluctuations over the past five years. In March 31, 2021, the company's cash conversion cycle was 67.87 days, which decreased to 59.02 days in March 31, 2022, indicating an improvement in efficiency. However, in the following years, the cash conversion cycle increased significantly, reaching 87.92 days in March 31, 2023, 104.96 days in March 31, 2024, and 137.26 days in March 31, 2025.

The increasing trend in the cash conversion cycle suggests that Cirrus Logic Inc is taking longer to convert its investments in inventory and accounts receivable into cash. This could be due to issues related to managing inventory levels, extending credit to customers, or delays in collecting payments.

The company should closely monitor and address the factors contributing to this trend to optimize its working capital management and improve cash flow efficiency in the future.