Ichor Holdings Ltd (ICHR)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 4.06 | 3.09 | 2.22 | 3.06 | 1.69 |
| Quick ratio | 1.48 | 1.34 | 1.05 | 2.18 | 0.89 |
| Cash ratio | 0.81 | 0.52 | 0.36 | 1.56 | 0.37 |
Ichor Holdings Ltd has shown a consistent improvement in its liquidity ratios over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has increased steadily from 1.69 in 2019 to 4.06 in 2023. This indicates that the company is in a stronger position to meet its short-term obligations.
Similarly, the quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Ichor Holdings Ltd's quick ratio has generally improved over the years, from 0.89 in 2019 to 1.48 in 2023. This suggests that the company has a sufficient level of liquid assets to cover its short-term liabilities without relying on the sale of inventory.
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. Ichor Holdings Ltd's cash ratio has also shown improvement over the years, from 0.37 in 2019 to 0.81 in 2023. This indicates that the company has increased its ability to meet its short-term obligations using only its cash reserves.
Overall, Ichor Holdings Ltd's liquidity ratios reflect a positive trend, signaling that the company has strengthened its liquidity position and is better equipped to manage its short-term financial obligations.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 113.12 | 92.34 | 75.47 | 48.29 | 48.01 |
The cash conversion cycle of Ichor Holdings Ltd has shown a fluctuating trend over the past five years. In 2023, the company's cash conversion cycle increased significantly to 113.12 days compared to the previous year's 92.34 days. This indicates that the company took longer to convert its investment in inventory into cash during the year.
Looking back over the five-year period, the cash conversion cycle has gradually increased from 48.01 days in 2019 to 113.12 days in 2023. This suggests a potential deterioration in the company's efficiency in managing its working capital and converting its assets into cash.
A longer cash conversion cycle may signal inefficiencies in inventory management, accounts receivable collection, or accounts payable management. It is important for Ichor Holdings Ltd to analyze the reasons behind this trend and implement strategies to improve its cash conversion cycle to enhance liquidity and overall financial performance.