SolarEdge Technologies Inc (SEDG)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.95 | 3.70 | 3.26 | 3.26 | 3.94 |
| Quick ratio | 0.56 | 1.02 | 1.15 | 2.33 | 2.86 |
| Cash ratio | 0.56 | 0.96 | 1.15 | 1.33 | 2.23 |
Based on the provided data, SolarEdge Technologies Inc's liquidity ratios showed some fluctuations over the years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, ranged from 1.95 to 3.70 during the period from December 31, 2020, to December 31, 2024. Although there was a slight decrease in the current ratio from 2023 to 2024, the company maintained a level above 1, indicating a healthy liquidity position.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, ranged from 0.56 to 2.86 during the same period. The sharp decline in the quick ratio from 2020 to 2024 suggests a decrease in the company's ability to cover its short-term obligations with its most liquid assets, such as cash and equivalents.
Furthermore, the cash ratio, which specifically evaluates the firm's ability to cover its current liabilities with cash and cash equivalents, decreased from 2.23 in 2020 to 0.56 in 2024. This decline indicates a reduction in SolarEdge's cash reserves relative to its short-term obligations over the years.
In conclusion, while SolarEdge Technologies Inc maintained a healthy current ratio above 1, suggesting it can meet its short-term obligations, the downward trend in the quick and cash ratios indicates a potential challenge in the company's ability to cover its immediate liabilities with its most liquid assets. Stakeholders should closely monitor these liquidity ratios to assess the company's short-term financial health.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 113.36 | 176.55 | 43.40 | 133.05 | 130.92 |
The cash conversion cycle of SolarEdge Technologies Inc has shown fluctuations over the years based on the provided data. In December 2020, the company had a cash conversion cycle of 130.92 days, which increased slightly to 133.05 days by December 2021. However, there was a significant improvement in efficiency by December 2022, with the cycle shrinking to 43.40 days, indicating a more effective management of cash flow and working capital.
The trend reversed in the following years, as the cash conversion cycle extended to 176.55 days by December 2023, suggesting possible challenges in converting investments in inventory and accounts receivable into cash. By December 2024, the cycle decreased to 113.36 days, but it still remained higher compared to the efficient performance observed in 2022.
Overall, the fluctuation in SolarEdge Technologies Inc's cash conversion cycle indicates varying efficiency in managing its working capital and cash flow during the years under review. Continued monitoring and potential optimization of the cycle may be necessary to enhance the company's financial health and operational effectiveness.