Rambus Inc (RMBS)

Rambus Inc's liquidity ratios have shown fluctuations over the past five years. The current ratio, which indicates the company's ability to cover its short-term liabilities with its short-term assets, decreased from 8.15 in 2020 to 2.56 in 2021 but then gradually improved to 8.44 in 2024. This suggests that the company's liquidity position improved significantly in the later years, indicating a healthier financial position.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, followed a similar trend. It dropped from 7.80 in 2020 to 2.49 in 2021 but then steadily increased to 7.70 in 2024. This indicates that Rambus Inc has a stronger ability to meet its short-term obligations without relying on inventory in the more recent years.

Finally, the cash ratio, which measures a company's ability to cover its current liabilities with its cash and cash equivalents, also showed improvement over the years. Starting at 5.85 in 2020, it decreased to 1.82 in 2021, but then rose to 5.89 in 2024. This suggests that Rambus Inc has been able to build up its cash reserves, strengthening its ability to meet short-term obligations with cash on hand.

Overall, the trend in Rambus Inc's liquidity ratios over the five-year period indicates an improvement in the company's ability to meet its short-term obligations and suggests a more stable and healthy financial position as of December 31, 2024.

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Additional liquidity measure

The cash conversion cycle of Rambus Inc has exhibited fluctuations over the past five years.

In December 2020, the company's cash conversion cycle stood at 279.92 days, indicating that it took Rambus nearly 280 days to convert its investments in inventory and other resources into cash inflows. This extended period suggests potential inefficiencies in the management of working capital.

By December 2021, Rambus had significantly improved its cash conversion cycle to 185.25 days, reflecting a more streamlined process in converting its resources into cash. This reduction in the cycle duration suggests enhanced operational efficiency in managing working capital and generating cash inflows.

The trend continued to improve in December 2022, with the cash conversion cycle further decreasing to 132.03 days. This indicates that Rambus was able to convert its investments into cash at a faster pace, potentially reflecting better inventory management and collection of receivables.

However, the cycle slightly increased in December 2023 to 169.72 days, suggesting that Rambus may have faced challenges in maintaining the efficiency achieved in the previous year. This could be attributed to various factors impacting the company's working capital management.

In December 2024, the cash conversion cycle rose again to 183.53 days, indicating a reversal in the positive trend observed in the previous year. This increase may signal potential difficulties in converting investments into cash efficiently, requiring a closer examination of Rambus' working capital processes.

Overall, the fluctuating nature of Rambus Inc's cash conversion cycle over the five-year period highlights the company's ongoing efforts to optimize its working capital management and improve the efficiency of cash flow generation.