Ichor Holdings Ltd (ICHR)

Liquidity ratios

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Current ratio 3.34 4.06 3.09 2.22 3.06
Quick ratio 0.80 0.81 0.52 0.36 1.56
Cash ratio 0.80 0.81 0.52 0.36 1.56

Ichor Holdings Ltd's liquidity ratios show fluctuations over the years from 2020 to 2024. The current ratio, a measure of the company's ability to cover short-term obligations with its current assets, decreased from 3.06 in 2020 to 2.22 in 2021, before increasing to 3.09 in 2022, 4.06 in 2023, and then declining to 3.34 in 2024. This fluctuation suggests variations in the company's ability to meet its short-term obligations.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, declined significantly from 1.56 in 2020 to 0.36 in 2021, before showing some improvement to 0.52 in 2022, 0.81 in 2023, and remaining at 0.80 in 2024. This indicates that the company may have had difficulty meeting its short-term liabilities in 2021 but improved its liquidity position in the following years.

The cash ratio, which measures a company's ability to cover current liabilities with its cash and cash equivalents, follows a similar trend to the quick ratio, reflecting the company's challenges in 2021 with a ratio of 0.36 before recovering to 0.52 in 2022, 0.81 in 2023, and remaining at 0.80 in 2024. Overall, the liquidity ratios of Ichor Holdings Ltd suggest some variability in liquidity levels but improvement overall in the ability to meet short-term obligations.


Additional liquidity measure

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash conversion cycle days 122.42 126.81 96.93 93.74 62.31

Ichor Holdings Ltd's cash conversion cycle has shown an increasing trend over the past five years, starting at 62.31 days in December 2020 and reaching 122.42 days by December 2024. This indicates that the company is taking longer to convert its investments in inventory back into cash.

The increase in the cash conversion cycle suggests that Ichor Holdings may be facing challenges in efficiently managing its working capital and liquidity. A longer cash conversion cycle can tie up more capital in inventory and accounts receivable, potentially leading to liquidity constraints and impacting the company's ability to fund its operations or take advantage of growth opportunities.

It is essential for Ichor Holdings to analyze the components of its cash conversion cycle, such as inventory turnover and accounts receivable collection period, to identify areas for improvement. By streamlining its operations and working capital management processes, the company can aim to shorten its cash conversion cycle and enhance its overall financial performance and liquidity position.