ON Semiconductor Corporation (ON)

ON Semiconductor Corp.'s liquidity ratios have shown a generally strong upward trend over the past five years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has consistently improved from 1.66 in 2019 to 2.71 in 2023. This indicates that ON Semiconductor Corp. has been able to enhance its short-term liquidity position.

The quick ratio, a more stringent measure of liquidity that excludes inventories from current assets, has also exhibited a positive trend, increasing from 0.98 in 2019 to 1.74 in 2023. This suggests that the company has become more efficient in meeting its short-term obligations without relying on inventory.

Furthermore, the cash ratio, which focuses solely on the most liquid assets (cash and cash equivalents) compared to current liabilities, has shown a significant improvement over the years. This ratio has grown from 0.59 in 2019 to 1.31 in 2023, indicating ON Semiconductor Corp. has strengthened its ability to cover short-term liabilities with cash on hand.

Overall, the increasing trend in these liquidity ratios reflects ON Semiconductor Corp.'s stronger liquidity position and ability to meet its short-term financial obligations effectively. Investors and stakeholders may find these improvements positive indicators of the company's financial health and operational efficiency.

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See also:

ON Semiconductor Corporation Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of ON Semiconductor Corp. has fluctuated over the past five years, indicating potential changes in its efficiency in managing its working capital.

In 2023, the cash conversion cycle increased significantly to 157.16 days from 102.61 days in 2022. This suggests that ON Semiconductor Corp. took longer to convert its investments in inventory into cash from sales. A longer cash conversion cycle could imply potential inefficiencies in managing inventory levels, collection of receivables, or payment of payables.

Comparing to the previous years, the cash conversion cycle was relatively lower in 2022, which might indicate improved working capital management during that period. However, in 2021, the cycle increased to 111.33 days from 116.93 days in 2020. The trend continued from 2020 when there was a slight increase from 117.57 days in 2019.

Overall, the fluctuation in ON Semiconductor Corp.'s cash conversion cycle indicates the company's ongoing efforts to optimize its working capital management practices. It is essential for the company to closely monitor and improve its cash conversion cycle to ensure efficient use of resources and maximize cash flow.