Hologic Inc (HOLX)

Hologic Inc's liquidity ratios have shown a generally positive trend over the past five years, indicating the company's ability to meet its short-term obligations efficiently. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has steadily improved from 1.79 in 2020 to 3.69 in 2024. This indicates that the company has sufficient current assets to cover its current liabilities, providing a buffer for unexpected financial challenges.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, has also shown an upward trend, increasing from 1.40 in 2020 to 2.83 in 2024. This suggests that the company has a strong ability to meet its short-term obligations using its most liquid assets.

Furthermore, the cash ratio, which specifically measures the company's ability to cover its current liabilities with its available cash and cash equivalents, has also improved significantly from 0.57 in 2020 to 2.25 in 2024. This indicates that Hologic Inc has a healthy cash reserve to meet its short-term obligations without relying on other current assets.

Overall, the increasing trend in all three liquidity ratios demonstrates Hologic Inc's strong liquidity position and effective management of short-term financial obligations over the past five years. This bodes well for the company's financial stability and ability to navigate any unforeseen challenges in the future.

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Additional liquidity measure

The cash conversion cycle of Hologic Inc has exhibited fluctuations over the past five years. The trend indicates that the company's ability to convert its resources efficiently into cash has varied during this period.

In 2024, the cash conversion cycle increased to 150.76 days from 139.09 days in 2023, indicating a less efficient conversion of resources into cash. This may suggest that the company took longer to convert its investments in inventory and accounts receivable into cash on hand.

In 2022, the cash conversion cycle was at 131.25 days, showing a slight improvement from the previous year. The company managed to streamline its operations slightly to convert resources into cash more efficiently during that year.

In 2021, the cash conversion cycle decreased significantly to 117.79 days, indicating a much more efficient conversion of resources into cash compared to the preceding years. This positive trend suggests that the company managed its working capital more effectively, leading to quicker cash conversion.

In 2020, the cash conversion cycle was at 150.42 days, reflecting a less efficient conversion of resources into cash compared to 2021. The company might have faced challenges in managing its working capital effectively during that year.

Overall, fluctuations in the cash conversion cycle of Hologic Inc over the past five years highlight the importance of efficient working capital management for the company's financial performance and liquidity position. It is essential for the company to continuously monitor and improve its cash conversion cycle to optimize its cash flow and operational efficiency.