Garmin Ltd (GRMN)

The liquidity ratios of Garmin Ltd for the past five years show a consistent and strong liquidity position.

The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has shown a generally increasing trend over the past five years, from 2.95 in 2019 to 3.41 in 2023. This indicates that Garmin has more than enough current assets to cover its current liabilities.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, also demonstrates a positive trend. Although it fluctuated slightly, the quick ratio increased from 2.04 in 2019 to 2.12 in 2023, showing that Garmin has a strong ability to meet its short-term obligations even without relying on inventory.

The cash ratio, which is the most conservative liquidity ratio as it only includes cash and cash equivalents in the numerator, also exhibits a consistent uptrend from 1.36 in 2019 to 1.50 in 2023. This suggests that Garmin has a solid amount of cash on hand relative to its current liabilities, providing a buffer against any potential short-term liquidity challenges.

Overall, the liquidity ratios of Garmin Ltd reflect a robust financial position with ample liquidity to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle of Garmin Ltd has fluctuated over the past five years. In 2023, the company's cash conversion cycle decreased to 185.69 days compared to 215.66 days in 2022. This indicates that Garmin took less time to convert its invested resources into cash during the most recent year, which could suggest more efficient management of working capital.

Comparing the 2023 figure to earlier years, we see that the cash conversion cycle was higher in 2022 but lower than in 2021. The trend over the past five years shows some variability in the efficiency of Garmin's cash conversion cycle, with fluctuations in the time taken to convert inventory into sales and eventually into cash.

It is important for Garmin to continue monitoring and managing its cash conversion cycle to ensure optimal utilization of working capital and efficient operations. Analyzing the components of the cash conversion cycle, such as inventory turnover, accounts receivable days, and accounts payable days, can provide further insights into the company's liquidity and operational efficiency.