Iridium Communications Inc (IRDM)

The current ratio of Iridium Communications Inc has generally shown a positive trend over the past few years, starting at 2.02 in March 2020 and peaking at 4.20 in September 2021 before declining to 2.06 by December 2023. The current ratio measures the company's ability to cover its short-term liabilities with its current assets, indicating that Iridium has generally been able to meet its short-term obligations with its current assets.

The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, also reflects a positive trend for Iridium. The quick ratio increased from 1.48 in March 2020 to 3.82 in September 2021, before declining to 1.14 by December 2024. This indicates that the company has had a strong ability to meet its short-term liabilities from its most liquid assets.

In terms of the cash ratio, which specifically looks at a company's ability to cover its current liabilities with its cash and cash equivalents, Iridium has generally maintained a healthy position. The cash ratio increased from 0.75 in March 2020 to 3.07 in September 2021, demonstrating a strong ability to cover its short-term obligations with its cash holdings. However, the ratio declined to 0.55 by December 2024, indicating a reduction in the level of cash relative to current liabilities.

Overall, Iridium Communications Inc has shown strength in its liquidity position over the years, as reflected by its current, quick, and cash ratios. However, it is important for the company to monitor and manage its liquidity ratios effectively to ensure it can meet its short-term obligations consistently.

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Additional liquidity measure

The cash conversion cycle of Iridium Communications Inc has fluctuated over the years, indicating changes in the company's efficiency in managing its cash flow and working capital. The cycle length, which represents the time it takes for the company to convert its investments in inventory and other resources into cash inflows from sales, has shown a decreasing trend from 154.66 days on March 31, 2020, to 171.62 days on December 31, 2024.

A shorter cash conversion cycle is generally favorable as it indicates that the company is able to quickly convert its investments into cash, improving liquidity and operational efficiency. Conversely, a longer cycle may suggest inefficiencies in managing working capital and could impact the company's financial health.

It's worth noting that there are fluctuations in the cash conversion cycle throughout the periods, with some periods showing significant improvements followed by increases in the cycle duration. These fluctuations could be influenced by various factors such as changes in sales trends, inventory management practices, payment terms with suppliers, and collection processes from customers.

Overall, monitoring and analyzing the cash conversion cycle can provide insights into the effectiveness of Iridium Communications Inc's working capital management and its ability to generate cash flow from its operational activities.