ON Semiconductor Corporation (ON)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 5.06 | 2.71 | 2.78 | 2.45 | 1.90 |
| Quick ratio | 3.11 | 1.57 | 1.84 | 1.40 | 1.05 |
| Cash ratio | 2.24 | 1.14 | 1.43 | 0.88 | 0.65 |
ON Semiconductor Corporation has shown a positive trend in its liquidity ratios over the past five years. The current ratio has improved consistently, increasing from 1.90 in 2020 to 5.06 in 2024, indicating a strong ability to cover its current liabilities with current assets.
Similarly, the quick ratio has also exhibited an upward trajectory, rising from 1.05 in 2020 to 3.11 in 2024. This demonstrates the company's enhanced ability to meet its short-term obligations using its most liquid assets, excluding inventory.
Furthermore, the cash ratio has shown substantial growth over the same period, climbing from 0.65 in 2020 to 2.24 in 2024. This signifies that ON Semiconductor Corporation has significantly increased its ability to cover its current liabilities with cash and cash equivalents alone.
Overall, the improving liquidity ratios of ON Semiconductor Corporation suggest a strengthened financial position and a better ability to meet its short-term obligations, which is a positive signal for investors and creditors.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 217.21 | 157.16 | 102.61 | 111.33 | 116.93 |
The cash conversion cycle of ON Semiconductor Corporation has shown a fluctuating trend over the period from December 31, 2020, to December 31, 2024. Initially, the company's cash conversion cycle stood at 116.93 days in 2020, indicating that it took ON Semiconductor approximately 117 days to convert its investments in inventory and accounts receivable into cash.
Subsequently, there was a slight improvement as the cash conversion cycle decreased to 111.33 days by December 31, 2021. This reduction suggested that the company was able to manage its working capital more efficiently, thereby converting its assets into cash at a slightly quicker pace.
The trend continued positively in 2022, with the cash conversion cycle declining further to 102.61 days. This improvement signaled that ON Semiconductor was becoming more adept at managing its inventory and accounts receivable, resulting in a faster conversion of investments into cash.
However, there was a notable reversal in 2023, as the cash conversion cycle sharply increased to 157.16 days. This significant extension in the cycle indicated potential challenges in working capital management, which may have led to a delay in converting assets into cash.
By the end of 2024, the cash conversion cycle for ON Semiconductor spiked to 217.21 days, representing a substantial increase from the previous year. This protracted cycle implied that the company was encountering difficulties in efficiently converting its working capital into cash, potentially signaling liquidity concerns or operational inefficiencies that need to be addressed.
In conclusion, the cash conversion cycle analysis of ON Semiconductor Corporation reveals fluctuations in the company's ability to convert investments in inventory and accounts receivable into cash over the specified period, with varying levels of efficiency and effectiveness in managing working capital.