Ormat Technologies Inc (ORA)

Ormat Technologies Inc's liquidity position, as reflected by its current ratio, has fluctuated over the past five years. The current ratio indicates the company's ability to meet its short-term obligations with its current assets. In 2020, Ormat had a significantly high current ratio of 3.13, suggesting a strong liquidity position. However, in 2021, the ratio decreased to 1.11, indicating a potential strain on short-term liquidity. By 2022 and 2023, the current ratio improved slightly to 1.33 and 1.20, respectively, but it still remains lower than the exceptional levels of 2020.

The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, also shows fluctuations in Ormat's liquidity. In 2020, the quick ratio was 2.64, signaling a very strong ability to cover short-term liabilities without relying on inventory. Subsequently, the quick ratio declined in 2021 and 2022, indicating a decrease in the company's ability to quickly cover its obligations with its most liquid assets. In 2023, although the quick ratio improved to 0.95, it remains below the levels of 2020.

The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, also varies for Ormat over the years. In 2020, the cash ratio was high at 1.86, reflecting a significant cash buffer to cover short-term liabilities. However, in 2021, the ratio dropped to 0.59, showing a substantial reduction in the company's immediate cash availability. The cash ratio continued to fluctuate in 2022 and 2023, ranging between 0.36 and 0.44, indicating a somewhat volatile liquidity position based solely on cash.

Overall, Ormat Technologies Inc's liquidity ratios reveal a mix of strengths and weaknesses in the company's ability to meet its short-term obligations. Management should continue to monitor and manage liquidity effectively to ensure ongoing financial stability.

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Additional liquidity measure

The cash conversion cycle of Ormat Technologies Inc has fluctuated over the past five years. In 2023, the company's cash conversion cycle was 57.77 days, representing an increase compared to 2022. This indicates that the company took longer to convert its investments in inventory and accounts receivable into cash during the year.

In 2021, Ormat Technologies Inc improved its cash conversion cycle to 40.23 days, showing a more efficient management of its working capital compared to the previous year. However, in 2020 and 2019, the company experienced longer cash conversion cycles of 64.78 days and 75.82 days, respectively, suggesting potential inefficiencies in managing its cash flow and working capital during those periods.

Overall, Ormat Technologies Inc should continue to monitor and optimize its cash conversion cycle to ensure efficient utilization of its resources and improve its overall financial performance.