Ormat Technologies Inc (ORA)

Ormat Technologies Inc's liquidity ratios indicate a declining trend over the past few years. The current ratio, which measures the company's ability to pay off its short-term liabilities with its current assets, has decreased from 3.13 in December 31, 2020, to 0.91 in December 31, 2024. This suggests that the company may have difficulties meeting its short-term obligations as its current assets are decreasing relative to its current liabilities.

Similarly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also shown a significant decline, from 2.20 in December 31, 2020, to 0.16 in December 31, 2024. This indicates a potential difficulty for Ormat Technologies Inc in meeting its immediate payment obligations without relying on selling inventory.

The cash ratio, which is the most conservative liquidity measure focusing solely on cash and cash equivalents to cover current liabilities, has also witnessed a downward trend from 2.20 in December 31, 2020, to 0.16 in December 31, 2024. This suggests that the company's ready cash reserves may not be sufficient to cover its short-term debt obligations.

Overall, the declining trend in Ormat Technologies Inc's liquidity ratios indicates potential challenges in its ability to maintain liquidity and meet short-term financial obligations. Monitoring these ratios closely and implementing strategies to improve liquidity management may be crucial for the company's financial health and stability.

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Additional liquidity measure

The cash conversion cycle of Ormat Technologies Inc has exhibited variations over the last five years. As of December 31, 2020, the company's cash conversion cycle was 30.05 days, indicating that it took approximately a month for Ormat to convert its investments in inventory and other resources into cash inflows.

By December 31, 2021, the cash conversion cycle decreased to 26.04 days, signaling an improvement in the company's efficiency in managing its working capital. However, by December 31, 2022, the cycle decreased even further to 17.91 days, reflecting a notable enhancement in Ormat's ability to convert its investments into cash more rapidly.

The trend reversed slightly by December 31, 2023, as the cash conversion cycle increased to 29.07 days, possibly indicating some challenges in managing working capital efficiency during that period. Subsequently, by December 31, 2024, the cycle decreased to 22.90 days, showing a potential effort to improve cash conversion efficiency once again.

Overall, the fluctuations in Ormat Technologies Inc's cash conversion cycle suggest varying levels of effectiveness in managing its working capital and converting investments into cash over the past five years.