Fulgent Genetics Inc (FLGT)

Fulgent Genetics Inc's liquidity ratios have exhibited fluctuations over the past few years. The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, has generally been above 1, indicating that the company has had more than enough current assets to cover its current liabilities. The ratio peaked at 9.52 on December 31, 2021, and has since fluctuated but remained above 4, indicating a strong liquidity position.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, has also shown a similar trend as the current ratio. The quick ratio has generally been above 1, with fluctuations, and peaked at 8.29 on December 31, 2021, suggesting that the company has a strong ability to meet its short-term obligations without relying on inventory.

The cash ratio, which is the most conservative measure of liquidity and only takes into account cash and cash equivalents to cover current liabilities, has also mirrored the trends seen in the current and quick ratios. The cash ratio has generally been above 1, indicating that Fulgent Genetics Inc has ample cash reserves to meet its short-term obligations, with a peak of 8.29 on December 31, 2021.

Overall, based on the liquidity ratios, Fulgent Genetics Inc appears to have maintained a strong liquidity position with the ability to cover its short-term obligations comfortably throughout the periods analyzed. However, it's important to continue monitoring these ratios to ensure the company's liquidity remains stable in the future.

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Additional liquidity measure

The cash conversion cycle is a measure of how quickly a company can convert its resources into cash flows. It is calculated by adding the company's days inventory outstanding (DIO) to its days sales outstanding (DSO) and then subtracting the days payables outstanding (DPO).

Analyzing Fulgent Genetics Inc's cash conversion cycle over the given periods, we observe fluctuations in the efficiency of its cash conversion.

Initially, there was an upward trend in the cash conversion cycle, reaching a peak of 155.46 days on September 30, 2020, indicating that the company was taking longer to convert its resources into cash and manage its working capital effectively.

However, starting from December 31, 2021, there was a notable improvement in the cash conversion cycle, showing a significant decline to 6.20 days by the end of December 31, 2022. This indicates that the company became more efficient in managing its cash flows, inventory, and receivables.

In the subsequent periods, Fulgent Genetics Inc managed to maintain a relatively low cash conversion cycle, with some minor fluctuations.

As of December 31, 2024, the cash conversion cycle stands at 16.98 days, indicating that the company continues to efficiently convert its resources into cash within a shorter timeframe, which is a positive sign for its working capital management.

Overall, the trend in Fulgent Genetics Inc's cash conversion cycle reflects improvements in working capital efficiency, suggesting better management of inventory, receivables, and payables over the analyzed periods.