MKS Instruments Inc (MKSI)

Liquidity ratios

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Current ratio 3.19 3.18 2.93 4.67 4.83
Quick ratio 1.34 1.31 1.71 3.23 3.29
Cash ratio 0.54 0.60 0.96 2.27 2.24

Based on the provided data for MKS Instruments Inc, let's analyze the liquidity ratios:

1. Current Ratio:
- The current ratio indicates the company's ability to cover its short-term liabilities with its short-term assets.
- MKS Instruments Inc's current ratio has shown a decreasing trend from 4.83 in December 2020 to 3.19 by the end of December 2024.
- While the current ratio remains above 1, indicating the company has more current assets than current liabilities, the decreasing trend suggests a potential decrease in liquidity over the years. However, the current ratio still indicates a healthy liquidity position.

2. Quick Ratio:
- The quick ratio provides a more stringent measure of liquidity by excluding inventory from current assets.
- MKS Instruments Inc's quick ratio has also shown a decreasing trend from 3.29 in December 2020 to 1.34 in December 2024.
- This decline in the quick ratio may indicate a reduction in the company's ability to meet its short-term obligations without relying on selling inventory. However, the quick ratio values are still above 1, indicating a reasonable level of liquidity.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, focusing solely on the company's ability to cover its current liabilities with cash and cash equivalents.
- MKS Instruments Inc's cash ratio has decreased from 2.24 in December 2020 to 0.54 in December 2024, indicating a significant decline in the company's ability to cover current liabilities with cash alone.
- This downward trend in the cash ratio suggests that the company may be relying less on cash to meet its short-term obligations over the years.

In conclusion, while MKS Instruments Inc's liquidity ratios have shown a declining trend over the years, indicating a potential decrease in liquidity, the company still maintains a relatively strong liquidity position based on the current, quick, and cash ratios. However, management should closely monitor these ratios to ensure the company's ability to meet its short-term obligations efficiently.


Additional liquidity measure

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash conversion cycle days 132.73 116.08 150.56 126.44 144.20

The cash conversion cycle of MKS Instruments Inc has shown fluctuations over the past five years. In 2020, the company had a cash conversion cycle of 144.20 days, which decreased to 126.44 days in 2021. However, there was an increase in the cash conversion cycle to 150.56 days in 2022, followed by a significant improvement to 116.08 days in 2023. The cycle then increased slightly to 132.73 days in 2024.

Overall, the trend suggests that MKS Instruments Inc has been managing its cash conversion cycle effectively, with efforts to reduce the time it takes to convert inventory and receivables into cash. However, the fluctuations indicate potential areas for further optimization in working capital management to enhance efficiency and liquidity.