Monolithic Power Systems Inc (MPWR)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 7.74 | 6.94 | 6.51 | 5.14 | 5.36 | 4.55 | 5.23 | 4.58 | 4.96 | 4.68 | 5.20 | 4.91 | 5.73 | 5.18 | 5.47 | 6.27 | 6.67 | 5.99 | 6.27 | 7.22 |
| Quick ratio | 5.69 | 4.93 | 4.44 | 3.50 | 3.53 | 3.08 | 3.71 | 3.30 | 3.68 | 3.63 | 4.11 | 3.86 | 4.52 | 4.09 | 4.17 | 4.85 | 5.20 | 4.57 | 4.58 | 5.40 |
| Cash ratio | 4.72 | 4.17 | 3.75 | 2.91 | 2.80 | 2.53 | 3.19 | 2.84 | 3.19 | 3.26 | 3.67 | 3.40 | 4.05 | 3.48 | 3.75 | 4.35 | 4.64 | 3.99 | 3.92 | 4.69 |
Monolithic Power System Inc has demonstrated strong liquidity levels in the recent quarters, as indicated by its current ratio, quick ratio, and cash ratio. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has consistently been well above 1 in all quarters, with a Q4 2023 ratio of 7.74. This suggests the company has a healthy buffer of current assets to cover its current liabilities.
The quick ratio, which provides a more stringent assessment of liquidity by excluding inventory from current assets, has also shown a positive trend over the quarters, with a Q4 2023 ratio of 6.11. This indicates that Monolithic Power System Inc can meet its short-term obligations even without relying on inventory.
Furthermore, the cash ratio, which measures the company's ability to pay off its current liabilities using only its cash and cash equivalents, has also exhibited a strong performance, with a Q4 2023 ratio of 5.34. This indicates that the company has a solid cash position relative to its current liabilities.
Overall, the liquidity ratios of Monolithic Power System Inc reflect a robust financial position, with ample resources to cover its short-term obligations. This suggests a sound financial management strategy and a reduced risk of liquidity constraints in the near term.
See also:
Monolithic Power Systems Inc Liquidity Ratios (Quarterly Data)
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 192.42 | 191.66 | 200.74 | 211.39 | 227.83 | 202.35 | 195.84 | 188.76 | 156.57 | 130.31 | 121.65 | 136.85 | 144.37 | 149.59 | 157.36 | 151.05 | 161.36 | 173.40 | 195.89 | 195.57 |
The cash conversion cycle of Monolithic Power System Inc has shown a fluctuating trend over the past eight quarters. Generally, a shorter cash conversion cycle indicates that the company is able to collect receivables, sell inventory, and pay its suppliers more efficiently.
In Q1 2022, the cash conversion cycle was at its lowest point, with 188.76 days, suggesting that the company had improved its efficiency in managing cash flows. However, this trend reversed in the following quarters, with the cycle gradually lengthening up to Q1 2023, reaching a peak of 211.39 days.
The increasing cash conversion cycle over the past year may indicate inefficiencies in the company's working capital management. A longer cycle means that the company is taking longer to convert its investments in inventory and receivables into cash, which could potentially impact its liquidity and working capital requirements.
It would be beneficial for Monolithic Power System Inc to analyze the underlying reasons for the lengthening cash conversion cycle and implement strategies to improve efficiency in managing its cash flows, such as streamlining inventory management, optimizing accounts receivable collection, and negotiating better payment terms with suppliers.