Plexus Corp (PLXS)

Plexus Corp's liquidity ratios show the company's ability to meet its short-term obligations and the availability of cash to cover immediate expenses.

- Current ratio: The current ratio has been relatively consistent over the past five years, ranging from 1.40 to 1.77. A current ratio above 1 indicates that Plexus Corp has more current assets than current liabilities, providing a buffer for short-term financial obligations. The current ratio has decreased slightly from 2020 to 2022 before showing an improvement in 2023 and 2024.

- Quick ratio: The quick ratio, also known as the acid-test ratio, measures the company's ability to meet short-term liabilities with its most liquid assets. Plexus Corp's quick ratio has fluctuated between 0.50 and 0.86 over the past five years, indicating a declining trend. A quick ratio below 1 suggests that the company may have difficulty meeting its short-term obligations without relying on inventory sales.

- Cash ratio: The cash ratio reflects the proportion of cash and cash equivalents to current liabilities. Plexus Corp's cash ratio has also shown a downward trend, decreasing from 0.38 in 2020 to 0.21 in 2024. A cash ratio below 1 indicates that the company may not have enough cash on hand to cover its immediate liabilities.

Overall, while Plexus Corp has maintained a current ratio above 1, suggesting a relatively stable position in meeting short-term obligations, the decreasing trend in both the quick ratio and cash ratio may indicate potential liquidity challenges. The company may need to closely monitor its cash flow management to ensure it can cover its short-term obligations efficiently.

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Additional liquidity measure

The cash conversion cycle of Plexus Corp has exhibited fluctuations over the past five years. In 2024, the company's cash conversion cycle was 95.92 days, showing an improvement compared to the previous year's cycle of 111.51 days. The cycle measures how long it takes for a company to convert its investments in inventory and other resources into cash from sales and ultimately back into cash through collections from customers.

In 2022 and 2023, Plexus Corp experienced longer cash conversion cycles of 114.81 days and 111.51 days, respectively, indicating potential inefficiencies in managing its working capital. However, in 2021 and 2020, the company's cash conversion cycles were comparatively shorter at 66.25 days and 53.40 days, respectively, suggesting more effective management of inventory, accounts receivable, and accounts payable during those periods.

The trend in Plexus Corp's cash conversion cycle reveals variability in the company's ability to efficiently convert its resources into cash and manage its working capital effectively. It is crucial for the company to assess the underlying factors contributing to these fluctuations and work towards optimizing its cash conversion cycle to enhance liquidity and operational efficiency.