Jabil Circuit Inc (JBL)

Based on the liquidity ratios of Jabil Circuit Inc over the past five years, we can observe the following trends:

1. Current Ratio:
The current ratio measures the company's ability to meet its short-term obligations with its current assets. Jabil's current ratio has fluctuated over the years, ranging from 1.01 to 1.16. The current ratio has decreased slightly in 2024 to 1.09, indicating that the company may have slightly less liquidity to cover its short-term liabilities compared to the previous year. However, a current ratio above 1.0 generally indicates that Jabil has sufficient current assets to cover its current liabilities.

2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Jabil's quick ratio has varied from 0.15 to 0.44, with a significant decrease to 0.19 in 2024. This decline suggests that Jabil may have reduced liquidity when considering only its most liquid assets to cover its immediate liabilities.

3. Cash Ratio:
The cash ratio focuses solely on cash and cash equivalents compared to current liabilities. Jabil's cash ratio has ranged from 0.11 to 0.19 over the past five years. In 2024, the cash ratio increased to 0.19, indicating that the company may have more cash on hand relative to its current liabilities, potentially improving its ability to cover short-term obligations with liquid cash reserves.

Overall, while Jabil Circuit Inc has demonstrated stability in terms of its current ratio staying above 1.0, the decreasing trend in the quick ratio, and the recent improvement in the cash ratio, suggest ongoing changes in the company's liquidity position that merit further monitoring and analysis.

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Additional liquidity measure

The cash conversion cycle of Jabil Circuit Inc has varied significantly over the past five years. In 2024, the company's cash conversion cycle was negative, implying that it could convert its inventory into cash before it had to pay suppliers. This suggests a favorable position in terms of managing working capital efficiently.

In contrast, in 2023, the company had a positive cash conversion cycle of 33.39 days, indicating that it took over a month on average to convert inventory into cash. This may suggest inefficiencies in managing cash flow and working capital during that period.

In 2022, there was an improvement as the cash conversion cycle decreased to 22.42 days, showing progress in managing working capital more effectively. Similarly, in 2021, the cycle further decreased to 7.96 days, indicating a faster conversion of inventory into cash.

The most significant improvement was observed in 2020 when the cash conversion cycle was a negative 34.89 days. This suggests that in that year, the company could convert inventory into cash before needing to pay suppliers, indicating efficient working capital management.

Overall, the trend in Jabil Circuit Inc's cash conversion cycle shows fluctuations over the years, with both positive and negative cycles. Efforts to decrease the cycle and manage working capital efficiently are evident in some years, while there are opportunities for improvement in other years to optimize cash flow and operational efficiency.