Ormat Technologies Inc (ORA)

Ormat Technologies Inc's liquidity ratios provide insights into the company's ability to meet its short-term financial obligations.

1. Current Ratio: Ormat's current ratio fluctuated over the years, ranging from a low of 0.87 on March 31, 2022, to a high of 3.13 on December 31, 2020. A current ratio above 1 indicates the company has more current assets than current liabilities, ensuring it can cover its short-term obligations. The ratio decreased from December 31, 2020, but generally remained above 1 until September 30, 2023, when it dropped to 0.95. It later increased slightly to 1.20 by December 31, 2023, before dropping again to 0.91 by December 31, 2024. While the current ratio fluctuated, it generally stayed around 1, implying Ormat may face challenges in meeting its short-term obligations.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, measures Ormat's ability to pay off its current liabilities without relying on the sale of inventory. The ratio ranged from a low of 0.14 on September 30, 2023, to a high of 2.20 on December 31, 2020. A quick ratio above 1 indicates that the company can meet its short-term liabilities using its most liquid assets. However, the quick ratio for Ormat dropped below 1 several times, indicating potential liquidity constraints and a reliance on inventory to meet short-term obligations.

3. Cash Ratio: The cash ratio, which is the most stringent liquidity measure, focuses on a company's ability to cover its current liabilities with cash and cash equivalents. Ormat's cash ratio ranged from 0.14 on September 30, 2023, to 2.20 on December 31, 2020. A cash ratio above 1 implies the company can pay off its short-term liabilities solely with cash on hand. Similar to the quick ratio, the cash ratio for Ormat was below 1 in several periods, suggesting a potential need to improve cash reserves to meet immediate financial obligations.

In conclusion, Ormat's liquidity ratios indicate fluctuations in its ability to cover short-term obligations. The company may need to carefully manage its working capital and liquidity to ensure it can meet its financial obligations in a timely manner.

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Additional liquidity measure

The cash conversion cycle is a vital metric that measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. For Ormat Technologies Inc, the cash conversion cycle has shown some fluctuations over the years based on the provided data.

Looking at the trend over the period from March 31, 2020, to December 31, 2024, we can observe variations in the cash conversion cycle. The cycle measures the days it takes for the company to convert its investments into cash and then back into investments. Ormat Technologies Inc's cash conversion cycle ranged from a low of 17.91 days on December 31, 2022, to a high of 36.01 days on March 31, 2023.

In general, a shorter cash conversion cycle is favorable as it indicates that the company is efficiently managing its working capital and turning inventory and receivables into cash quickly. Conversely, a longer cycle may suggest inefficiencies in managing working capital, which can tie up funds and impact liquidity.

Ormat Technologies Inc has shown a mix of shorter and longer cycles throughout the period, indicating some variability in its working capital management. It is important for the company to continuously monitor and optimize its cash conversion cycle to ensure efficient operations and maximize cash flows.

Overall, a detailed analysis of Ormat Technologies Inc's cash conversion cycle reveals insights into the company's working capital management efficiency and provides valuable information for investors and stakeholders evaluating the firm's financial performance and liquidity position.