Gentex Corporation (GNTX)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 3.67 | 3.79 | 4.81 | 5.51 | 5.53 |
| Quick ratio | 2.07 | 2.05 | 2.85 | 4.14 | 3.91 |
| Cash ratio | 0.89 | 0.95 | 1.47 | 2.53 | 2.54 |
Gentex Corp. has exhibited consistently strong liquidity positions over the years as indicated by its liquidity ratios. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has shown a decreasing trend from 5.53 in 2019 to 3.67 in 2023. This suggests that Gentex Corp. may be slightly less capable of meeting its short-term obligations using its current assets alone.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also displayed a declining trend from 4.08 in 2019 to 2.19 in 2023. While the quick ratio remains above 1, indicating the company's ability to cover its short-term liabilities without relying on inventory, the decreasing trend warrants attention.
Additionally, the cash ratio, which provides the most conservative measure of liquidity by considering only cash and cash equivalents to cover current liabilities, has reduced from 2.71 in 2019 to 1.01 in 2023. This downward trend may signal a potential decrease in Gentex Corp.'s immediate ability to settle its current obligations solely with cash on hand.
Overall, while Gentex Corp. maintains solid liquidity ratios, the declining trends suggest a possible need for the company to monitor its liquidity position closely, especially in relation to meeting short-term obligations effectively in the future.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 98.78 | 116.74 | 117.56 | 104.82 | 89.46 |
The cash conversion cycle of Gentex Corp. has fluctuated over the past five years. In 2023, the company's cash conversion cycle decreased to 102.89 days from 123.02 days in 2022. This indicates that Gentex Corp. took fewer days to convert its investments in inventory and other resources into cash during the most recent fiscal year.
However, it is worth noting that the cash conversion cycle was higher in 2023 compared to 2019, where it stood at 93.43 days. This suggests that there might have been challenges in managing working capital efficiency in the intervening years.
Overall, monitoring and managing the cash conversion cycle is essential for Gentex Corp. to optimize its working capital management and ensure efficient operations.