Sanmina Corporation (SANM)

The liquidity ratios for Sanmina Corp have exhibited fluctuations over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has varied between 1.60 and 1.91. This indicates a generally positive trend in the company's ability to cover its short-term liabilities with its current assets, with the ratio improving in the latest period.

The quick ratio, which provides a more stringent assessment of liquidity by excluding inventory from current assets, has also shown variability, ranging from 0.91 to 1.29. Despite the fluctuations, the company's ability to meet short-term obligations without relying on inventory has generally improved over the years, as evidenced by the latest ratio of 1.18.

The cash ratio, reflecting the proportion of current liabilities covered by cash and cash equivalents, has demonstrated similar variability, with values fluctuating between 0.45 and 0.60. The latest cash ratio of 0.58 suggests that the company has maintained a relatively stable ability to cover its short-term liabilities with cash and cash equivalents.

Overall, while there have been fluctuations in Sanmina Corp's liquidity ratios, the company has generally displayed an improved ability to meet short-term obligations with its current assets and cash reserves in the latest period. However, it is essential to consider the underlying reasons for these fluctuations and assess the company's overall liquidity position in conjunction with other financial indicators.

---

Additional liquidity measure

The cash conversion cycle of Sanmina Corp has shown fluctuations over the past five years. In the fiscal year ending September 30, 2023, the cash conversion cycle increased to 44.24 days from 35.64 days in the previous year, indicating that the company took longer to convert its investments in inventory and accounts receivable into cash during this period.

This increase in the cash conversion cycle suggests potential inefficiencies in managing inventory and collecting receivables, which could tie up the company's cash resources for a longer time. It is important for the company to closely monitor and manage its working capital components to improve the efficiency of its cash conversion cycle.

In comparison to previous years, the cash conversion cycle was also higher in fiscal years 2021 and 2020 at 39.23 days and 34.93 days, respectively. However, it was relatively lower at 29.18 days in fiscal year 2019, indicating that the company was more efficient in managing its working capital and converting its investments into cash during that period.

Overall, the trend in the cash conversion cycle reflects the company's effectiveness in managing its working capital and liquidity. Continuous monitoring and improvement in inventory and receivables management could lead to a reduction in the cash conversion cycle, thereby enhancing the company's cash flow and overall financial performance.