NXP Semiconductors NV (NXPI)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 2.36 | 1.91 | 2.12 | 2.13 | 2.14 |
| Quick ratio | 1.06 | 1.04 | 1.18 | 1.15 | 1.13 |
| Cash ratio | 1.06 | 1.04 | 1.18 | 1.15 | 1.13 |
NXP Semiconductors NV has maintained a relatively stable current ratio over the past few years, ranging from 2.12 to 2.36. This indicates that the company has a strong ability to meet its short-term obligations with its current assets. However, there was a slight decrease in the current ratio from 2023 to 2024, suggesting a potential decrease in short-term liquidity efficiency.
Looking at the quick ratio, which excludes inventory from current assets, NXP Semiconductors NV has also shown consistent performance, with values ranging from 1.04 to 1.18. This ratio provides a more stringent measure of liquidity, and the company's ability to meet short-term obligations without relying on selling inventory appears satisfactory.
The cash ratio, which focuses solely on the ability to cover short-term liabilities with cash and cash equivalents, has been maintained at around 1.15 in recent years. This indicates that NXP Semiconductors NV has a sufficient amount of cash to cover its most immediate liabilities, providing a good buffer in case of any short-term financial challenges.
Overall, the liquidity ratios of NXP Semiconductors NV demonstrate a sound financial position in terms of meeting short-term obligations and suggest that the company is managing its liquidity effectively. However, monitoring the current ratio's decrease in 2024 may be prudent to ensure continued strong liquidity management.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 156.49 | 136.10 | 114.35 | 86.87 | 85.89 |
The cash conversion cycle of NXP Semiconductors NV has shown a trend of increasing days over the years, indicating a lengthening time for the company to convert its investments in inventory and other resources into cash. In December 31, 2020, the company had a cash conversion cycle of 85.89 days, which increased slightly to 86.87 days in December 31, 2021. However, there was a significant jump in the cash conversion cycle to 114.35 days in December 31, 2022, followed by a further increase to 136.10 days in December 31, 2023, and ultimately reaching 156.49 days in December 31, 2024.
This lengthening of the cash conversion cycle may indicate potential inefficiencies in managing inventory, collecting receivables, and/or paying suppliers, which could impact the company's working capital management and overall financial health. It is important for NXP Semiconductors NV to closely monitor and address these trends to improve its cash flow and operational efficiency.