Plexus Corp (PLXS)

Plexus Corp's liquidity ratios have shown some fluctuations over the past few quarters. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has generally remained above 1, indicating a comfortable level of liquidity. However, there have been slight fluctuations with a peak at 1.88 in March 2021 and a low of 1.40 in September 2022.

The quick ratio, a more stringent measure of liquidity that excludes inventories from current assets, has displayed more variability. Plexus Corp's quick ratio has ranged from a low of 0.14 in March 2023 to a high of 0.70 in December 2022. This indicates that the company may have had challenges in meeting its short-term obligations without relying on selling inventory during some quarters.

The cash ratio, which provides the most conservative measure of liquidity by focusing solely on cash and cash equivalents, has generally been low but stable for Plexus Corp. The ratio has ranged from 0.13 to 0.38 over the periods analyzed, with an increase in the ratio from December 2019 to December 2022.

Overall, while Plexus Corp has maintained a current ratio above 1, indicating a generally favorable liquidity position, the fluctuating quick ratio suggests potential challenges in quickly meeting short-term obligations without relying on inventory sales. The stable cash ratio indicates a consistent level of cash on hand to cover immediate liabilities. Management should monitor these ratios closely to ensure the company's liquidity remains at adequate levels to support its operations.

---

Additional liquidity measure

The cash conversion cycle of Plexus Corp has shown fluctuations over the periods analyzed. It measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Looking at the trend, we observe that the cash conversion cycle has ranged from a low of 34.42 days to a high of 136.86 days over the past five years. A lower cash conversion cycle indicates that the company is efficiently managing its working capital, leading to quicker turnover and conversion of resources into cash.

In analyzing the recent data, the cash conversion cycle has slightly decreased from 110.91 days in June 2024 to 96.04 days in September 2024. This improvement suggests that Plexus Corp may be enhancing its operations in terms of managing inventory, collecting receivables, and paying its obligations.

However, a comparison of the current cycle with historical data reveals that the company experienced a longer cash conversion cycle in September 2024 compared to the same period in the prior year, where it stood at 79.74 days. This may indicate that Plexus Corp could be facing challenges in efficiently managing its working capital.

Further investigation into the components of the cash conversion cycle, such as inventory turnover, accounts receivable collection period, and accounts payable deferral period, would provide more insights into the company's overall working capital management.