Sanmina Corporation (SANM)

Sanmina Corporation's liquidity ratios demonstrate varying levels of short-term solvency over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has shown a generally improving trend from 2020 to 2024, reaching a high of 1.99. This indicates that Sanmina has sufficient current assets to cover its current liabilities.

On the other hand, the quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Sanmina's quick ratio has fluctuated over the years, with a low of 0.21 in 2022 and a high of 0.36 in 2021. The downward trend in quick ratio may suggest potential challenges in quickly meeting immediate financial demands without relying on inventory liquidation.

Lastly, the cash ratio, which focuses solely on the company's cash and cash equivalents to cover short-term liabilities, has remained relatively stable around the 0.30 range, except for a slight increase to 0.37 in 2021. This indicates that Sanmina has maintained a consistent level of cash reserves compared to its immediate obligations.

In summary, while Sanmina Corporation's current ratio indicates a generally healthy liquidity position over the past five years, the fluctuating trend in the quick ratio suggests potential challenges in meeting short-term obligations without relying on inventory. The company's cash ratio stability indicates a maintained level of cash reserves to cover immediate liabilities.

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Additional liquidity measure

The cash conversion cycle of Sanmina Corporation has been improving over the past five years. In fiscal year 2020, the company had a negative cash conversion cycle of -19.78 days, indicating that it was able to convert its inventory into cash quickly. This trend continued in the following years, with the company achieving even better results.

In fiscal year 2021, the cash conversion cycle improved to -24.78 days, further reducing the time it takes for Sanmina Corporation to convert its resources into cash. This trend of efficiency continued in fiscal year 2022, with the cash conversion cycle decreasing to -17.94 days.

The most significant improvement was seen in fiscal year 2023, where Sanmina Corporation achieved a cash conversion cycle of -3.54 days. This indicates that the company was managing its working capital efficiently and converting its assets into cash at a faster rate.

In the most recent fiscal year, 2024, Sanmina Corporation further improved its cash conversion cycle to a mere 0.08 days, reflecting the company's effectiveness in managing its operating cycle. Overall, the consistent improvement in the cash conversion cycle over the years demonstrates Sanmina Corporation's strong financial management and operational efficiency.