Cirrus Logic Inc (CRUS)

The liquidity ratios of Cirrus Logic Inc have shown consistent improvement over the past five years. The current ratio has steadily increased from 4.10 in 2020 to 5.93 in 2024, indicating the company's ability to meet its short-term obligations with its current assets has strengthened.

Similarly, the quick ratio has exhibited a positive trend, rising from 2.95 in 2020 to 3.70 in 2024. This ratio excludes inventory from current assets, providing a more conservative measure of the company's ability to cover its short-term liabilities.

Furthermore, the cash ratio has also shown improvement, increasing from 1.98 in 2020 to 2.82 in 2024. This ratio gives insight into the company's ability to cover its current liabilities with its most liquid assets, cash and cash equivalents.

Overall, the increasing trend in all three liquidity ratios indicates that Cirrus Logic Inc's liquidity position has strengthened over the years, suggesting a healthy ability to meet its short-term financial obligations.

---

Additional liquidity measure

The cash conversion cycle is a key metric used to analyze how efficiently a company manages its cash flows. Cirrus Logic Inc's cash conversion cycle has fluctuated over the past five years, indicating variations in its liquidity and working capital management.

In the most recent fiscal year ending March 31, 2024, the company's cash conversion cycle increased to 92.99 days from the previous year's 74.33 days. This suggests that Cirrus Logic took longer to convert its investments in inventory and accounts receivable into cash during the year.

Comparing the current cycle to prior years, there has been an upward trend since March 31, 2022, when the cycle stood at 57.36 days. The increase in the cash conversion cycle could be attributed to a slower turnover of inventory or a delay in collecting receivables, which may impact the company's liquidity position and operational efficiency.

It is important for Cirrus Logic Inc to closely monitor its cash conversion cycle and implement strategies to optimize working capital management. By reducing the cycle time, the company can enhance its cash flow and operational performance, leading to improved financial health and sustainability.