MaxLinear Inc (MXL)

MaxLinear Inc's liquidity ratios have shown variability over the years from 2020 to 2024.

1. Current Ratio: The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has generally been above 1, indicating that MaxLinear Inc has had more than enough current assets to meet its short-term obligations. The ratio fluctuated between 1.55 in 2020 to 2.20 in 2023, with a slight decrease to 1.77 in 2024. This suggests that the company's liquidity position improved significantly in 2023 but slightly declined in 2024.

2. Quick Ratio: The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also shown a similar trend. It increased from 0.93 in 2020 to 1.61 in 2023 before decreasing to 1.12 in 2024. This indicates that the company's ability to meet its short-term obligations using only its most liquid assets improved until 2023 but declined in 2024.

3. Cash Ratio: The cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, remained relatively stable around 0.60 to 0.84 during the five-year period. This suggests that MaxLinear Inc has maintained a consistent level of cash reserves relative to its current liabilities, providing a cushion for short-term financial needs.

Overall, MaxLinear Inc has demonstrated a satisfactory liquidity position over the years, as evidenced by its current, quick, and cash ratios. However, there were some fluctuations in the ratios, highlighting the importance of continuous monitoring of liquidity metrics to ensure the company's ability to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle of MaxLinear Inc has fluctuated over the past five years. In December 2020, the company's cash conversion cycle was 140.81 days, indicating that it takes approximately 140.81 days for MaxLinear to convert its investments in inventory into cash received from customers.

By December 2021, the cash conversion cycle improved to 121.43 days, suggesting a more efficient management of working capital and quicker transformation of inventory into cash. However, by December 2022, the cycle increased slightly to 127.05 days, indicating a small delay in cash conversion compared to the previous year.

In December 2023, the cash conversion cycle significantly extended to 182.81 days, signaling a possible deterioration in the efficiency of the company's working capital management. Furthermore, by December 2024, the cycle increased even further to 216.37 days, representing a considerable delay in converting inventory investments into cash receipts from customers.

Overall, the trend in MaxLinear's cash conversion cycle shows a fluctuating pattern, with periods of improvement followed by increases in the number of days required to convert working capital into cash. This implies that the company may need to focus on optimizing its inventory management and collection processes to enhance its cash conversion efficiency in the future.