EchoStar Corporation (SATS)

EchoStar Corporation's liquidity ratios exhibit significant fluctuations over the years under review. Looking at the current ratio, we see a positive trend from 2.04 in December 2020 to 5.03 in December 2022 before dropping to 0.61 in December 2023 and then slightly recovering to 1.39 in December 2024. This ratio indicates the company's ability to cover its short-term liabilities with its current assets, with higher values generally reflecting better liquidity. The sharp decline in 2023 raises concerns about the company's ability to meet its immediate obligations during that year.

The quick ratio, also known as the acid-test ratio, follows a similar trend to the current ratio. Starting at 1.78 in December 2020, the ratio increases steadily to 3.97 in December 2022 before plummeting to 0.30 in December 2023 and slightly improving to 0.98 in December 2024. This ratio provides a more stringent measure of liquidity as it excludes inventory from current assets, focusing on the most liquid assets like cash and marketable securities. The decline in 2023 to below 1 suggests potentially inadequate liquidity to cover immediate liabilities without relying on inventory.

The cash ratio, which is the most conservative liquidity measure, mirrors the trends in the current and quick ratios across the years. With values equal to the quick ratio, the cash ratio indicates the proportion of current liabilities that can be covered by cash alone. EchoStar Corporation shows a consistent trend in this ratio, reaching the highest value of 3.97 in December 2022 before dropping to 0.30 in December 2023, underscoring potential cash flow challenges during that period.

In conclusion, EchoStar Corporation's liquidity ratios demonstrate fluctuating levels of liquidity over the years, with notable strengths in 2022 and weaknesses in 2023. It is important for the company to maintain a healthy liquidity position to ensure it can meet its short-term obligations efficiently and sustainably.

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Additional liquidity measure

EchoStar Corporation's cash conversion cycle measures the time it takes for the company to convert its investments in inventory into cash from sales. This cycle is a crucial indicator of the company's efficiency in managing its working capital.

Based on the provided data, the trend of EchoStar Corporation's cash conversion cycle is as follows:

- As of December 31, 2020, the cash conversion cycle was 48.05 days.
- By December 31, 2021, the cycle decreased slightly to 48.01 days.
- However, by December 31, 2022, the cycle increased to 52.33 days, indicating a potential slowdown in the conversion of inventory to cash.
- There was a significant improvement by December 31, 2023, with the cycle decreasing to 20.32 days.
- By December 31, 2024, the cycle further decreased to 16.39 days, showing a notable improvement in efficiency in managing working capital.

Overall, EchoStar Corporation has shown fluctuations in its cash conversion cycle over the period examined. The company demonstrated improved efficiency in converting inventory to cash in the later years, which can positively impact its liquidity and overall financial health.