Entegris Inc (ENTG)

Entegris Inc's liquidity ratios reflect the company's ability to meet its short-term obligations.

1. Current Ratio:
- The current ratio has shown a declining trend over the years, from 4.08 in 2020 to 3.06 in 2022, before slightly increasing to 3.85 in 2023 and then dropping to 3.08 in 2024.
- While the ratios are above 1, indicating that the company has more current assets than current liabilities, the decreasing trend may suggest potential issues in managing current liabilities efficiently.

2. Quick Ratio:
- The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, has also decreased over the years, from 2.79 in 2020 to 1.57 in 2024.
- This trend indicates that Entegris may have fewer liquid assets to cover its immediate liabilities, which could pose some liquidity challenges.

3. Cash Ratio:
- The cash ratio, which is the most conservative measure of liquidity as it considers only cash and cash equivalents, has decreased significantly from 1.92 in 2020 to 0.63 in 2024.
- This decline indicates a decreasing ability of Entegris to cover its current liabilities with its available cash resources, which may raise concerns about its short-term liquidity position.

In summary, Entegris Inc's liquidity ratios have shown a general downward trend over the years, indicating potential challenges in the company's ability to meet its short-term financial obligations. Management should closely monitor liquidity levels and take necessary steps to improve liquidity management to ensure the company's financial health in the short term.

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Additional liquidity measure

The cash conversion cycle measures the time it takes for a company like Entegris Inc to convert its investment in inventory and other resources into cash flows from sales. Looking at the data provided, we observed fluctuations in Entegris Inc's cash conversion cycle over the past five years:

- As of December 31, 2020, Entegris Inc's cash conversion cycle was at 139.51 days, indicating a moderately efficient cycle.
- By December 31, 2021, the cycle had extended to 156.62 days, suggesting a slower conversion of cash from investments.
- The trend continued in 2022 with the cash conversion cycle increasing to 183.50 days, signaling prolonged periods of investment conversion.
- However, there was a significant improvement by December 31, 2023, where the cycle decreased to 132.51 days, implying a more efficient conversion process.
- By December 31, 2024, the cycle increased slightly to 148.32 days, showing a moderate slowdown compared to the previous year.

Overall, Entegris Inc experienced fluctuations in its cash conversion cycle, with periods of both efficiency and delays in cash conversion over the five-year period. Monitoring and optimizing this cycle can help the company manage its working capital effectively and improve its overall financial performance.