FormFactor Inc (FORM)
Liquidity ratios
| Dec 31, 2024 | 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 4.61 | 4.76 | 4.46 | 4.51 | 4.38 | 3.91 | 3.85 | 3.75 | 3.17 | 3.15 | 3.37 | 3.60 | 3.52 | 3.17 | 3.23 | 3.40 | 3.15 | 3.35 | 3.70 | 3.63 |
| Quick ratio | 2.74 | 2.74 | 2.61 | 2.72 | 2.51 | 1.89 | 1.91 | 1.84 | 1.59 | 1.54 | 1.68 | 1.92 | 1.86 | 1.65 | 1.67 | 1.83 | 1.65 | 1.77 | 2.12 | 2.04 |
| Cash ratio | 2.74 | 2.74 | 2.61 | 2.72 | 2.51 | 1.89 | 1.91 | 1.84 | 1.59 | 1.54 | 1.68 | 1.92 | 1.86 | 1.65 | 1.67 | 1.83 | 1.65 | 1.77 | 2.12 | 2.04 |
FormFactor Inc's liquidity ratios indicate a strong ability to meet its short-term obligations.
1. Current Ratio: The current ratio measures the company's ability to cover its short-term liabilities with its current assets. FormFactor Inc's current ratio has been consistently above 3.0 over the past five years, indicating a healthy liquidity position. The ratio increased steadily from 3.63 in March 2020 to 4.61 in December 2024, with a slight fluctuation in between. This suggests that the company has a sufficient buffer of current assets to meet its short-term obligations.
2. Quick Ratio: The quick ratio provides a more stringent measure of liquidity by excluding inventory from current assets. FormFactor Inc's quick ratio has also shown a positive trend, ranging from 1.54 in September 2022 to 2.74 in December 2024. The company's ability to cover its short-term liabilities with quick assets (excluding inventory) improved steadily, indicating a strong liquidity position even after excluding less liquid assets.
3. Cash Ratio: The cash ratio focuses on the company's ability to cover its short-term liabilities with cash and cash equivalents only. FormFactor Inc's cash ratio mirrored the trend of the quick ratio, increasing from 1.54 in September 2022 to 2.74 in December 2024. This indicates that the company has a significant level of cash and cash equivalents to meet its short-term obligations without relying on other current assets.
Overall, based on the current ratio, quick ratio, and cash ratio, FormFactor Inc appears to have a robust liquidity position, with ample resources to cover its short-term liabilities. This strong liquidity provides the company with financial flexibility and the ability to weather unforeseen challenges in the short term.
Additional liquidity measure
| Dec 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 81.37 | 87.33 | 99.90 | 98.18 | 100.77 | 95.85 | 100.92 | 95.07 | 101.23 | 109.85 | 120.07 | 104.20 | 91.10 | 93.18 | 92.31 | 90.52 | 89.28 | 88.42 | 85.56 | 78.84 |
The cash conversion cycle of FormFactor Inc has been fluctuating over the past five years. The company's cash conversion cycle measures the time it takes for FormFactor to convert its investments in inventory into cash flows from sales.
From March 31, 2020, to December 31, 2021, the cash conversion cycle showed a gradual increase from 78.84 days to 91.10 days. This indicates that FormFactor was taking longer to convert its inventory into sales and subsequently into cash during this period.
However, in the following quarters from March 31, 2022, to September 30, 2024, the trend has been slightly more volatile with the cycle ranging from 87.33 days to 120.07 days. Particularly noteworthy is the peak seen in June 30, 2022, followed by a notable decrease by December 31, 2024.
Overall, the analysis of the cash conversion cycle data suggests that FormFactor Inc has been managing its inventory and cash flows more efficiently in recent quarters. It is essential for the company to monitor and optimize its cash conversion cycle continuously to ensure operational efficiency and financial health.