Fulgent Genetics Inc (FLGT)

Fulgent Genetics Inc's liquidity ratios indicate the firm's ability to meet its short-term financial obligations efficiently. Looking at the current ratio, which measures the company's ability to pay off its current liabilities using its current assets, we observe a favorable trend over the five-year period. The current ratio has generally increased from 4.02 in 2020 to 6.96 in 2023, suggesting an improvement in the company's short-term liquidity position.

Similarly, the quick ratio, also known as the acid-test ratio, indicates the company's ability to cover its immediate liabilities without relying on inventory. Fulgent Genetics Inc has shown a consistent increase in its quick ratio from 3.90 in 2020 to 6.96 in 2023, reflecting a strong ability to meet short-term obligations using more liquid assets.

Analyzing the cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents alone, we see a similar positive trend. The cash ratio has risen steadily from 2.34 in 2020 to 6.25 in 2023, indicating an enhanced ability to meet short-term obligations with available cash reserves.

Overall, Fulgent Genetics Inc's liquidity ratios display a robust liquidity position, with increasing current, quick, and cash ratios over the past five years. This trend suggests that the company has sufficient liquid assets to meet its short-term financial commitments effectively.

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Additional liquidity measure

The cash conversion cycle of Fulgent Genetics Inc has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 34.19 days, indicating the average number of days it takes for the company to convert its investments in inventory and other resources into cash from sales and then back into cash as it collects accounts receivable.

Compared to the previous year, the cash conversion cycle increased significantly from 17.05 days in 2022 to 34.19 days in 2023, suggesting potential challenges in managing working capital efficiently. This increase may indicate longer inventory holding periods or slower accounts receivable collection processes.

In 2021, the cash conversion cycle was 38.57 days, showing a slight decrease from the previous year. However, a sharp increase was noted in 2020 with a cycle of 134.80 days, which may have been influenced by operational inefficiencies or disruptions in the business environment, impacting inventory turnover and accounts receivable collection.

The improvement in the cash conversion cycle in 2022 followed by a deterioration in 2023 suggests the company may need to focus on streamlining its operations, enhancing inventory management, and optimizing accounts receivable processes to shorten the cycle effectively. Overall, monitoring and managing the cash conversion cycle is crucial for Fulgent Genetics Inc to ensure efficient cash flow management and sustainable business operations.