Harmonic Inc (HLIT)

Harmonic, Inc.'s liquidity ratios indicate the company's ability to meet its short-term financial obligations. The current ratio, which measures the company's ability to pay off its current liabilities with its current assets, has shown some variability over the past five years, ranging from a low of 1.07 in 2022 to a high of 1.62 in 2020. The current ratio has generally been above 1, suggesting that the company has had sufficient current assets to cover its short-term liabilities.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventories from current assets. Harmonic, Inc.'s quick ratio has generally been lower than the current ratio, indicating a more conservative measure of the company's ability to meet its short-term obligations. The ratio has ranged from 0.70 in 2022 to 1.38 in 2020, with a downward trend in recent years.

The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover its current liabilities with its cash and cash equivalents alone. Harmonic, Inc.'s cash ratio has also experienced variability, ranging from 0.36 in 2022 to 0.93 in 2020. The decreasing trend in the cash ratio over the past few years might indicate that the company has been using more of its cash reserves for other purposes.

Overall, Harmonic, Inc. has maintained a current ratio above 1, indicating a generally healthy liquidity position. However, the downward trends in the quick ratio and cash ratio suggest that the company may need to closely monitor its liquidity and ensure it has sufficient cash reserves to meet its short-term obligations, especially given the variability in these ratios over the years.

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Additional liquidity measure

The cash conversion cycle of Harmonic, Inc. has fluctuated over the past five years. In 2023, the cash conversion cycle increased to 141.11 days from 126.50 days in 2022, indicating a longer period of time it takes for the company to convert its investments in inventory and other resources back into cash. This may suggest challenges in managing working capital efficiently.

Comparing to previous years, the cash conversion cycle in 2023 is notably higher than in 2021 when it was 73.70 days, and 2020 when it was 86.62 days. This increase may indicate potential issues in inventory management, accounts receivable collection, or cash flow management for Harmonic, Inc.

In 2019, the cash conversion cycle was 56.05 days, indicating that the company was more efficient in the management of its working capital compared to the more recent years. However, the trend since then has been towards longer cash conversion cycles, which may have implications for the company's liquidity and operational efficiency. Further analysis and investigation into the underlying factors driving these changes are warranted to improve the company's financial performance and sustainability.