Flex Ltd (FLEX)

Liquidity ratios

Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019
Current ratio 1.43 1.40 1.52 1.59 1.53 1.46 1.48 1.36 1.29 1.31 1.34 1.37 1.40 1.44 1.45 1.48 1.46 1.41 1.26 1.24
Quick ratio 0.66 0.58 0.64 0.68 0.66 0.60 0.65 0.56 0.53 0.23 0.59 0.63 0.28 0.33 0.86 0.89 0.86 0.77 0.60 0.63
Cash ratio 0.28 0.25 0.29 0.29 0.29 0.25 0.30 0.22 0.20 0.23 0.28 0.27 0.28 0.33 0.34 0.35 0.33 0.28 0.27 0.24

Flex Ltd's liquidity ratios have fluctuated over the past few quarters. The current ratio, which measures the company's ability to cover its short-term liabilities with current assets, has shown a general increasing trend from 1.24 in December 2019 to 1.43 in September 2024. This indicates that the company has improved its short-term liquidity position over time.

On the other hand, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has been more volatile, ranging from 0.23 in June 2022 to 0.89 in December 2020. This suggests that Flex Ltd may have varying levels of inventory that could impact its ability to meet immediate obligations without relying on selling inventory.

The cash ratio, which is the most conservative liquidity metric as it only considers cash and cash equivalents, has also displayed variability, fluctuating between 0.20 in September 2022 and 0.35 in December 2020. This indicates that the company may have differing levels of cash on hand to cover its short-term debts.

Overall, while Flex Ltd's current ratio shows a positive trend in liquidity management, the fluctuating nature of the quick ratio and cash ratio warrants closer monitoring of the company's inventory management and cash position to ensure continued ability to meet short-term obligations.

Additional liquidity measure

Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019
Cash conversion cycle days 53.91 56.37 64.28 64.75 64.65 66.01 66.04 64.00 62.77 7.67 52.19 49.80 -10.08 -14.99 41.24 40.58 37.14 34.08 16.66 18.37

Flex Ltd's cash conversion cycle has shown fluctuations over the past few quarters. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

In the most recent quarter, the cash conversion cycle stood at 53.91 days, indicating an improvement compared to the previous quarter's 56.37 days. This suggests that the company is managing its inventory and accounts receivable more efficiently, resulting in a faster conversion of investments into cash.

However, looking back over the last several quarters, there have been periods where the cash conversion cycle increased, reaching as high as 66.04 days in the first quarter of 2023. Such extended cash conversion cycles can indicate inefficiencies in managing working capital and may lead to cash flow challenges.

It's worth noting that Flex Ltd experienced a significant improvement in its cash conversion cycle in the fourth quarter of 2021 and the first quarter of 2022, where the cycle was negative. This suggests that the company was able to collect cash from customers before paying its suppliers, a beneficial position for cash management.

Overall, Flex Ltd's management should continue to focus on optimizing its working capital management to ensure a more consistent and efficient cash conversion cycle, which can contribute to improved liquidity and financial performance in the long term.