Photronics Inc (PLAB)

Current ratio

		Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019
Total current assets	US$ in thousands	785,450	644,652	550,616	500,139	427,527
Total current liabilities	US$ in thousands	185,223	193,797	176,148	142,939	151,954
Current ratio		4.24	3.33	3.13	3.50	2.81

October 31, 2023 calculation

Current ratio = Total current assets ÷ Total current liabilities
= $785,450K ÷ $185,223K
= 4.24

The current ratio measures a company's ability to meet its short-term obligations with its short-term assets. Photronics, Inc.'s current ratio has shown an increasing trend over the past five years, rising from 2.81 in 2019 to 4.24 in 2023. This indicates that the company's short-term liquidity position has strengthened significantly.

The ratio for 2023 stands at 4.24, implying that for every dollar of current liabilities, Photronics, Inc. has $4.24 in current assets. This suggests a robust ability to cover short-term obligations. The steady improvement in the current ratio may indicate more efficient working capital management, strengthened cash flows, or prudent investment in current assets relative to current liabilities.

However, while a high current ratio generally reflects good liquidity, an excessively high ratio may indicate that the company is not effectively using its current assets to generate future growth. Therefore, a holistic analysis of other financial ratios and the company's overall financial health is crucial for a comprehensive assessment.