Fabrinet (FN)

Liquidity ratios

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 Sep 30, 2019
Current ratio 3.61 3.52 3.71 3.72 3.43 3.07 3.00 2.95 2.83 2.92 2.88 2.90 3.04 3.43 3.17 3.32 3.40 3.34 3.42 3.25
Quick ratio 2.60 2.53 2.72 2.65 2.25 1.94 1.91 1.83 1.70 1.91 1.81 1.83 1.99 2.30 2.09 2.28 2.35 2.34 2.40 2.10
Cash ratio 1.54 1.46 1.52 1.47 1.14 0.97 0.96 0.95 0.89 1.02 1.04 1.10 1.23 1.39 1.22 1.40 1.46 1.40 1.41 1.26

Fabrinet's liquidity ratios have shown overall stability and strength over the past few quarters.

The current ratio has been consistently above 3, indicating that the company has more than enough current assets to cover its current liabilities. This suggests that Fabrinet is well-positioned to meet its short-term obligations and have a cushion of extra assets available.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, has also remained at healthy levels above 2. This indicates that Fabrinet could meet its short-term obligations even if inventory cannot be quickly converted into cash.

Moreover, the cash ratio has been consistently above 1, indicating that Fabrinet holds sufficient cash and cash equivalents to cover its current liabilities without relying on inventory or receivables. This signifies a strong ability to meet short-term obligations using cash on hand.

Overall, Fabrinet's liquidity ratios reflect a robust financial position with ample liquidity to meet its short-term obligations efficiently.

Additional liquidity measure

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 Sep 30, 2019
Cash conversion cycle days 78.09 80.26 84.33 85.95 95.26 95.71 93.20 91.93 92.50 84.07 85.41 82.80 82.00 86.62 91.41 81.69 80.61 81.00 84.47 79.98

The cash conversion cycle of Fabrinet over the past few quarters has shown some fluctuations but generally indicates the effectiveness of the company in managing its working capital.

The cash conversion cycle represents the time it takes for a company to convert its investments in inventory into cash flows from sales, considering both the days inventory outstanding (DIO) and days sales outstanding (DSO), while subtracting the days payables outstanding (DPO). A shorter cash conversion cycle is generally positive as it indicates faster turnover of capital and efficient management of working capital.

Analyzing the trend in Fabrinet's cash conversion cycle over the periods, there seems to be some variability. Following a peak of 95.71 days in March 2023, the company managed to reduce it to 78.09 days by June 2024, signifying an improvement in its working capital management efficiency. This reduction suggests that Fabrinet is now taking less time to convert its investment in inventory and receivables into cash, which may result from improvements in inventory management or the speed of collecting receivables.

However, despite the improvement, fluctuations in the cash conversion cycle suggest that Fabrinet may need to continue monitoring and optimizing its working capital processes to maintain a consistent and efficient cash conversion cycle. Overall, a decreasing trend in the cash conversion cycle is a positive indicator of the company's ability to efficiently manage its cash flow and working capital.