FormFactor Inc (FORM)
Quick ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 190,728 | 177,812 | 106,126 | 151,010 | 187,225 |
| Short-term investments | US$ in thousands | 169,295 | 150,507 | 132,005 | 125,055 | 67,810 |
| Receivables | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 131,345 | 131,095 | 149,667 | 148,754 | 154,571 |
| Quick ratio | 2.74 | 2.50 | 1.59 | 1.86 | 1.65 |
December 31, 2024 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($190,728K
+ $169,295K
+ $—K)
÷ $131,345K
= 2.74
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets. It is calculated by dividing current assets excluding inventory by current liabilities.
Analyzing FormFactor Inc's quick ratio over the past five years reveals a generally healthy liquidity position. The quick ratio has shown a positive trend, increasing from 1.65 in December 2020 to 2.74 in December 2024. This indicates that the company has improved its ability to cover its short-term liabilities with its liquid assets over the years.
A quick ratio above 1 is typically considered satisfactory as it suggests that the company can meet its short-term obligations without relying heavily on selling inventory. FormFactor Inc's quick ratio has consistently exceeded 1 in all the years presented, indicating a strong liquidity position.
The significant increase in the quick ratio from 2020 to 2024, reaching 2.74, demonstrates the company's enhanced ability to cover its current liabilities with its quick assets like cash, marketable securities, and receivables. This improvement suggests that FormFactor Inc has become more efficient in managing its liquid resources to meet its short-term financial obligations.
Overall, FormFactor Inc's quick ratio trend reflects a positive liquidity position, indicating the company's ability to handle short-term financial challenges and meet its obligations without relying heavily on inventory.
Peer comparison
Dec 31, 2024