Onto Innovation Inc (ONTO)

Onto Innovation Inc's liquidity ratios show a consistently strong financial position over the past five years. The current ratio, which measures the company's ability to cover short-term liabilities with current assets, has been increasing steadily, reaching 8.69 at the end of 2023. This indicates that Onto Innovation Inc has a comfortable cushion of current assets to meet its short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity as it excludes inventory from current assets. Onto Innovation Inc's quick ratio has also shown a positive trend over the years, improving to 6.26 by the end of 2023. This demonstrates the company's ability to quickly cover its short-term liabilities without relying on inventory.

The cash ratio, which is the most stringent liquidity ratio, measures the ability of a company to cover its current liabilities with cash and cash equivalents alone. Onto Innovation Inc's cash ratio has been relatively stable over the years, with a slight increase to 4.72 at the end of 2023. This indicates that the company holds a sufficient amount of cash to meet its short-term obligations without relying on other current assets.

Overall, the liquidity ratios of Onto Innovation Inc paint a picture of a financially sound and well-managed company with strong liquidity positions, providing reassurance to stakeholders and creditors about the company's ability to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle of Onto Innovation Inc has shown varying trends over the past five years. In 2023, the cash conversion cycle increased to 357.75 days from 298.96 days in 2022, indicating that the company took longer to convert its investments in inventory and accounts receivable into cash. This may suggest potential issues with managing working capital efficiently.

The significant decrease in the cash conversion cycle from 2021 to 2022 (192.50 days to 298.96 days) is worth noting as it indicates an improvement in the company's ability to convert inventory and receivables into cash. This could be attributed to better inventory management or faster collection of accounts receivable during that period.

In 2020, the cash conversion cycle was relatively high at 296.16 days, suggesting that the company faced challenges in efficiently managing its working capital and converting investments into cash promptly.

The highest cash conversion cycle was observed in 2019 at 464.54 days, indicating that the company struggled the most in converting its investments into cash during that year. This could have been due to inefficiencies in inventory management, extended accounts receivable collection periods, or delays in settling payables.

Overall, analyzing the cash conversion cycle of Onto Innovation Inc over the past five years reveals fluctuations in its working capital management efficiency. It is essential for the company to focus on optimizing its cash conversion cycle to ensure a healthy cash flow and sustainable operations.