First Solar Inc (FSLR)
Liquidity ratios
| Dec 31, 2024 | Sep 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 2.45 | 2.14 | 2.41 | 3.55 | 3.19 | 3.36 | 3.08 | 3.65 | 4.09 | 4.21 | 4.07 | 4.39 | 4.26 | 4.77 | 4.69 | 3.56 | 3.83 | 3.66 | 3.75 | 2.73 |
| Quick ratio | 1.67 | 1.16 | 1.63 | 2.64 | 2.17 | 2.35 | 2.19 | 2.80 | 2.76 | 2.86 | 2.51 | 3.10 | 3.03 | 3.55 | 3.47 | 2.41 | 2.64 | 2.52 | 2.59 | 2.14 |
| Cash ratio | 0.86 | 0.71 | 1.13 | 1.61 | 1.52 | 1.73 | 1.93 | 2.48 | 2.36 | 2.30 | 2.11 | 2.51 | 2.69 | 2.67 | 2.29 | 2.06 | 2.23 | 2.07 | 2.06 | 1.64 |
Based on the provided data, we can observe the following trends in First Solar Inc's liquidity ratios:
1. Current Ratio: The company's current ratio has been relatively stable over the years, ranging from a high of 4.77 on June 30, 2021, to a low of 2.41 on March 31, 2024. This indicates that First Solar Inc has consistently maintained a strong ability to cover its short-term obligations with its current assets.
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. First Solar Inc's quick ratio has also shown stability, fluctuating between 3.55 on June 30, 2021, and 1.16 on September 30, 2024. This suggests that the company has had a solid ability to meet its short-term obligations without relying on inventory liquidation.
3. Cash Ratio: The cash ratio measures the company's ability to cover its current liabilities with its cash and cash equivalents only. First Solar Inc's cash ratio has followed a consistent pattern, with values ranging from 2.69 on September 30, 2021, to 0.71 on September 30, 2024. This indicates that the company has maintained a strong cash position relative to its immediate payment requirements.
Overall, based on the analysis of the liquidity ratios, First Solar Inc appears to have maintained a healthy liquidity position throughout the periods examined. The company has consistently demonstrated the ability to meet its short-term obligations using its current assets and cash reserves, indicating a strong financial position in terms of liquidity.
See also:
Additional liquidity measure
| Dec 31, 2024 | Sep 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 229.53 | 261.63 | 221.30 | 258.47 | 211.83 | 158.25 | 103.54 | 85.28 | 147.20 | 178.76 | 174.37 | 132.32 | 122.45 | 148.59 | 156.91 | 108.48 | 88.00 | 93.26 | 92.20 | 111.49 |
The cash conversion cycle of First Solar Inc, a key indicator of its efficiency in managing working capital, has shown fluctuations over the past several quarters.
As of December 31, 2019, the cash conversion cycle was 111.49 days, indicating that the company took approximately 111 days to convert its investments in inventory and other resources into cash inflows. This figure decreased to 92.20 days by March 31, 2020, suggesting an improvement in the company's operational efficiency.
However, from March 31, 2021, the cash conversion cycle started to increase significantly, reaching a peak of 261.63 days by September 30, 2024. This may indicate challenges in managing inventory, receivables, and payables efficiently during this period.
By December 31, 2024, the cash conversion cycle decreased to 229.53 days, but it still remained significantly higher compared to earlier periods.
Overall, the increasing trend in the cash conversion cycle from 2021 to 2024 raises concerns about First Solar's working capital management efficiency and the potential impact on its liquidity and profitability. Management may need to closely monitor and address the factors contributing to this trend to improve the company's financial performance.