Micron Technology Inc (MU)

Micron Technology Inc's liquidity ratios have fluctuated over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has decreased from 4.46 in 2023 to 2.64 in 2024. While the current ratio remains above 1, indicating that the company can meet its short-term obligations, the downward trend raises some concern about its liquidity position.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, also shows a decline from 2.53 in 2023 to 1.59 in 2024. This suggests that Micron may have fewer liquid assets readily available to cover its current liabilities without relying on inventory, signaling a potential liquidity challenge.

The cash ratio, which represents the company's ability to cover its current liabilities with cash and cash equivalents, has also dropped significantly from 2.01 in 2023 to 0.88 in 2024. This sharp decrease indicates that Micron may have limited cash reserves relative to its short-term obligations, potentially increasing its liquidity risk.

Overall, the decreasing trend in all three liquidity ratios over the past year raises concerns about Micron Technology Inc's ability to maintain adequate liquidity levels to meet its short-term financial commitments. Further monitoring and analysis of the company's liquidity position are warranted to assess its financial health and resilience in the face of uncertain economic conditions.

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See also:

Micron Technology Inc Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Micron Technology Inc has been fluctuating over the past five years. It increased from 135.71 days in 2020 to 142.55 days in 2022, then decreased to 116.88 days in 2021, before rising again to 184.36 days in 2023 and further to 197.92 days in 2024.

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from customer sales. A shorter cash conversion cycle is generally preferred as it indicates that the company is able to efficiently manage its working capital and generate cash from its operations.

The increasing trend in the cash conversion cycle for Micron Technology Inc over the past two years may indicate potential challenges in managing its working capital effectively, which could lead to cash flow constraints and inefficiencies in its operations. Further analysis of the company's inventory management, accounts receivable collection, and accounts payable practices may be warranted to address these issues and improve cash flow performance.