MKS Instruments Inc (MKSI)

The liquidity ratios of MKS Instruments Inc have shown varying trends over the past five years.

1. Current ratio:
The current ratio measures the company's ability to meet its short-term obligations with its current assets. MKS Instruments Inc's current ratio has generally been above 1.0, indicating that it has had more than enough current assets to cover its current liabilities in each of the past five years. The current ratio increased from 2019 to 2021 before experiencing a slight decline in 2022 and 2023. The current ratio of 3.18 in 2023 indicates that the company has $3.18 in current assets for every $1 of current liabilities.

2. Quick ratio:
The quick ratio is a more stringent measure of liquidity as it excludes inventory from current assets. MKS Instruments Inc's quick ratio has also remained above 1.0 in each of the past five years, highlighting the company's ability to meet its short-term obligations without relying on selling inventory. The quick ratio has generally been lower than the current ratio, reflecting the exclusion of inventory from the calculation. The quick ratio increased from 2019 to 2021 and has fluctuated slightly in the following years. The quick ratio of 1.74 in 2023 indicates that the company has $1.74 in liquid assets for every $1 of current liabilities.

3. Cash ratio:
The cash ratio is the most conservative liquidity ratio, measuring the company's ability to pay off its current liabilities using only its cash and cash equivalents. MKS Instruments Inc's cash ratio has also trended above 1.0 in the past five years, indicating that the company has had sufficient cash on hand to cover its short-term obligations. Similar to the quick ratio, the cash ratio increased from 2019 to 2021 and has shown slight fluctuations afterward. The cash ratio of 1.03 in 2023 means that the company has $1.03 in cash and cash equivalents for every $1 of current liabilities.

Overall, the liquidity ratios of MKS Instruments Inc suggest that the company has maintained a strong ability to meet its short-term obligations throughout the years, with a comfortable margin of safety indicated by the ratios consistently above 1.0. However, the slight decline in the current ratio, quick ratio, and cash ratio from 2021 to 2023 may warrant further monitoring to ensure continued liquidity strength.

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Additional liquidity measure

The cash conversion cycle for MKS Instruments Inc has shown variability over the past five years, ranging from a low of 116.08 days in 2023 to a high of 154.44 days in 2019. It is a measure of how long it takes for the company to convert its investments in inventory back into cash flow from sales.

A lower cash conversion cycle indicates that the company is efficiently managing its working capital, including inventory levels, accounts receivable collection, and accounts payable payment. On the other hand, a higher cash conversion cycle suggests inefficiencies in working capital management, potentially leading to higher financing costs and reduced overall profitability.

The decreasing trend from 2019 to 2023, with a significant decrease in 2023, suggests that MKS Instruments Inc has improved its working capital management efficiency, potentially leading to quicker cash flows and improved overall financial health. Further analysis would be needed to understand the specific drivers behind these changes and evaluate the company's overall financial performance in more detail.