Enphase Energy Inc (ENPH)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 3.53 | 4.59 | 3.55 | 3.33 | 1.75 |
| Quick ratio | 2.80 | 4.02 | 3.22 | 3.07 | 1.61 |
| Cash ratio | 2.46 | 3.18 | 2.53 | 2.31 | 1.27 |
Enphase Energy Inc's liquidity ratios demonstrate a generally robust financial position over the years analyzed.
1. Current Ratio: The current ratio has shown a positive trend from 1.75 in December 31, 2020, to 3.53 in December 31, 2024. This indicates the company's ability to meet its short-term obligations with its current assets has significantly improved, providing a strong cushion against potential liquidity issues.
2. Quick Ratio: Similarly, the quick ratio has also witnessed an upward trajectory, starting at 1.61 in December 31, 2020, and peaking at 4.02 in December 31, 2023. This indicates that the company has a substantial amount of highly liquid assets to cover its current liabilities without relying on inventory sales.
3. Cash Ratio: The cash ratio has followed a favorable path, indicating a company’s ability to cover its short-term liabilities with its cash and cash equivalents. It increased from 1.27 in December 31, 2020, to 3.18 in December 31, 2023, which indicates a healthy cash position.
Overall, Enphase Energy Inc's liquidity ratios demonstrate a strengthening liquidity position over the years, with ample current and liquid assets to cover its short-term obligations. This suggests the company is well-positioned to navigate any short-term financial challenges that may arise.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 100.41 | 99.91 | 75.67 | 70.75 | 59.58 |
The cash conversion cycle for Enphase Energy Inc has shown a fluctuating trend over the past five years. It increased from 59.58 days as of December 31, 2020, to 100.41 days as of December 31, 2024, indicating a longer time taken to convert its investments in inventory into cash receipts from sales. This suggests potential challenges in managing working capital efficiently, as the company is taking more time to sell its inventory, collect receivables, and pay off payables.
The rising trend in the cash conversion cycle may also reflect issues in inventory management, sales efficiency, or collection policies. Further analysis of the components of the cash conversion cycle, including days inventory outstanding, days sales outstanding, and days payables outstanding, could provide insights into specific areas for improvement.
Overall, Enphase Energy Inc's increasing cash conversion cycle highlights the importance of monitoring working capital closely and implementing strategies to optimize cash flow and operational efficiency to ensure sustainable financial performance.