Monolithic Power Systems Inc (MPWR)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 7.74 | 5.36 | 4.96 | 5.73 | 6.67 |
| Quick ratio | 5.69 | 3.53 | 3.68 | 4.52 | 5.20 |
| Cash ratio | 4.72 | 2.80 | 3.19 | 4.05 | 4.64 |
The liquidity ratios of Monolithic Power System Inc have shown a generally strong trend over the past five years.
1. Current Ratio:
The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has consistently been above 1, indicating a strong ability to cover its short-term liabilities. The ratio has shown an increasing trend from 6.67 in 2019 to 7.74 in 2023, suggesting an improvement in liquidity and the company's ability to meet its short-term obligations.
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. Monolithic Power System Inc has maintained a healthy quick ratio above 1 over the past five years, indicating a strong ability to cover short-term liabilities without relying on the sale of inventory. The ratio has shown an increasing trend from 5.37 in 2019 to 6.11 in 2023, further indicating an improvement in liquidity.
3. Cash Ratio:
The cash ratio, which is the most conservative measure of liquidity, focuses solely on the company's ability to cover short-term liabilities with cash and cash equivalents. Monolithic Power System Inc has maintained a solid cash ratio above 1 over the past five years, indicating a high level of liquidity and ability to meet short-term obligations with cash on hand. The ratio has shown an increasing trend from 4.81 in 2019 to 5.34 in 2023, highlighting an improvement in the company's liquidity position.
Overall, the liquidity ratios of Monolithic Power System Inc demonstrate a strong liquidity position and an upward trend in liquidity over the past five years. This indicates the company's ability to meet its short-term obligations efficiently and effectively.
See also:
Monolithic Power Systems Inc Liquidity Ratios
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 192.42 | 227.83 | 156.57 | 144.37 | 162.00 |
The cash conversion cycle of Monolithic Power System Inc has shown fluctuating trends over the past five years. In 2023, the company's cash conversion cycle decreased to 182.40 days compared to 227.83 days in 2022, indicating improved efficiency in managing its working capital. The company's cash conversion cycle was also higher in 2021 at 156.58 days compared to the prior year, potentially reflecting challenges in converting inventory and receivables into cash.
When compared to 2020 and 2019, the cash conversion cycle was slightly higher in 2021, suggesting a slower turnover of cash within the business. Overall, the company should continue monitoring and managing its cash conversion cycle to ensure efficient utilization of its resources and optimize its liquidity position.