CTS Corporation (CTS)

CTS Corp.'s liquidity ratios have shown a consistent improvement over the past five years from 2019 to 2023. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has increased steadily from 2.45 in 2019 to 3.29 in 2023. This indicates that CTS Corp. has been able to strengthen its liquidity position and is in a better position to meet its short-term liabilities.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also trended upwards from 2.01 in 2019 to 2.67 in 2023. This shows that CTS Corp. has a sufficient level of highly liquid assets to meet its short-term obligations without relying on selling inventory.

The cash ratio, which is the most conservative liquidity measure that focuses solely on cash and cash equivalents to cover current liabilities, has also improved significantly from 1.21 in 2019 to 1.86 in 2023. This demonstrates that CTS Corp. has been able to build up its cash reserves and is better equipped to manage its short-term financial obligations with cash on hand.

Overall, the upward trend in CTS Corp.'s liquidity ratios suggests that the company has been effectively managing its working capital and strengthening its financial position over the years. This improved liquidity position bodes well for the company's ability to weather any short-term financial challenges and seize opportunities for growth in the future.

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Additional liquidity measure

The cash conversion cycle of CTS Corp. has shown fluctuating trends over the past five years. In 2023, the company's cash conversion cycle increased to 68.88 days from 65.33 days in 2022. This indicates that it took CTS Corp. longer to convert its investments in inventory and accounts receivable into cash during 2023.

Comparing to previous years, in 2021, the company had a relatively lower cash conversion cycle of 51.78 days, which suggests that CTS Corp. was more efficient in managing its working capital that year. However, the cycles in 2020 and 2019 were higher at 63.79 days and 53.70 days, respectively.

Overall, CTS Corp. should monitor its cash conversion cycle closely to improve its working capital management efficiency, potentially by optimizing inventory levels, speeding up collection of accounts receivable, and managing payment terms with suppliers.