Fulgent Genetics Inc (FLGT)

Based on the provided data, Fulgent Genetics Inc's liquidity ratios show a consistently strong position over the years.

1. Current Ratio: The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown a healthy trend. It increased from 4.70 in 2020 to 9.52 in 2021 before gradually decreasing to 4.85 in 2024. The ratios above 1 indicate the company has more than enough current assets to cover its current liabilities.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Fulgent Genetics Inc's quick ratio has followed a similar pattern to the current ratio, signaling a strong ability to meet short-term obligations without relying on inventory. The ratio fluctuated between 3.29 in 2020 and 8.29 in 2021 before settling at 3.54 in 2024.

3. Cash Ratio: The cash ratio, which is the strictest measure of liquidity as it only considers cash and cash equivalents to cover current liabilities, has shown a similar trend to the quick ratio. The company maintained a healthy cash position over the years, with the ratio ranging from 3.29 in 2020 to 8.29 in 2021, before declining to 3.54 in 2024.

Overall, Fulgent Genetics Inc's liquidity ratios indicate a strong ability to meet its short-term financial obligations throughout the years, with considerable current assets readily available to cover current liabilities. However, the decreasing trend in the ratios from 2021 to 2024 suggests a potential need for monitoring and management of working capital to ensure continued liquidity strength.

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Additional liquidity measure

The cash conversion cycle of Fulgent Genetics Inc has shown a decreasing trend over the years, indicating an improvement in the management of its working capital.

As of December 31, 2020, the cash conversion cycle was 67.02 days, reflecting that it took the company around 67 days to convert its investments in inventory and receivables into cash flow from sales.

By December 31, 2021, the cash conversion cycle had decreased to 20.67 days, showing a significant reduction in the time taken to convert working capital into cash.

Further improvement was noted by December 31, 2022, with a cash conversion cycle of 6.20 days, suggesting the company efficiently managed its inventory and receivables, resulting in a faster conversion to cash.

However, by the end of 2023, the cash conversion cycle slightly increased to 11.51 days, indicating a small slowdown in the conversion process compared to the previous year.

Finally, as of December 31, 2024, the cash conversion cycle stood at 17.36 days, showing a moderate increase from the previous year but remaining relatively low compared to the initial years.

Overall, the decreasing trend in the cash conversion cycle reflects Fulgent Genetics Inc's effective management of working capital and ability to efficiently convert investments into cash flow, with some minor fluctuations in recent years.