Proto Labs Inc (PRLB)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 4.04 | 2.61 | 3.34 | 4.82 | 4.97 |
| Quick ratio | 3.78 | 2.24 | 2.89 | 4.38 | 4.58 |
| Cash ratio | 2.07 | 1.12 | 1.41 | 3.22 | 3.38 |
Proto Labs Inc has exhibited strong liquidity positions over the past five years, as indicated by its current ratio, quick ratio, and cash ratio.
The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown a fluctuating trend over the years. The ratio increased significantly in 2023 to 4.04, indicating that Proto Labs Inc had $4.04 in current assets for every $1 in current liabilities. This level of liquidity improved from the previous year and suggests a healthy ability to meet its short-term obligations.
Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also demonstrated a positive trend. At 3.76 in 2023, the company had $3.76 in liquid assets to cover its short-term liabilities, reflecting an improvement in its ability to meet immediate financial obligations without relying on inventory.
The cash ratio, which focuses solely on the most liquid assets, further emphasizes Proto Labs Inc's strong liquidity position. With a cash ratio of 2.25 in 2023, the company had $2.25 in cash and cash equivalents for every $1 in current liabilities. This ratio has shown an increasing trend over the years, indicating the company's enhanced ability to cover short-term obligations with its readily available cash reserves.
Overall, Proto Labs Inc's liquidity ratios suggest that the company has effectively managed its short-term liquidity positions, maintaining a comfortable cushion to meet its financial obligations in the short term.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 60.62 | 56.66 | 50.06 | 41.17 | 38.69 |
Proto Labs Inc's cash conversion cycle has shown a fluctuating trend over the past five years. The cycle increased from 34.72 days in 2019 to 54.93 days in 2022 before decreasing to 51.82 days in 2023. This indicates that the company took longer to convert its investments in inventory and receivables back into cash in 2022 compared to 2019, but made some improvements in 2023.
A longer cash conversion cycle may suggest inefficiencies in managing inventory and receivables, potentially tying up more cash in operations. Conversely, a shorter cycle indicates a faster conversion of investments into cash, which could imply better working capital management and liquidity.
Overall, the trend in Proto Labs Inc's cash conversion cycle signals the need for continuous monitoring and potential adjustments to optimize working capital efficiency and cash flow generation.