Silicon Laboratories Inc (SLAB)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 4.51 | 7.87 | 3.35 | 3.43 | 6.85 |
| Quick ratio | 2.86 | 6.80 | 3.20 | 2.88 | 5.82 |
| Cash ratio | 2.69 | 6.42 | 3.05 | 2.55 | 5.27 |
Silicon Laboratories Inc's liquidity ratios have exhibited fluctuations over the past five years. The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, has varied significantly, reaching its highest level of 7.87 in 2022 and its lowest level of 3.35 in 2021. The current ratio decreased to 4.51 in 2023, indicating a slight decrease in the company's short-term liquidity compared to the previous year.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Silicon Laboratories Inc's quick ratio has shown a similar trend to the current ratio, with the highest value of 6.80 in 2022 and the lowest value of 2.88 in 2020. In 2023, the quick ratio decreased to 2.86, suggesting a decline in the company's ability to quickly cover its short-term obligations without relying on inventory.
The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents to cover current liabilities, has followed a similar pattern to the current and quick ratios. The cash ratio peaked at 6.42 in 2022 and fell to 2.69 in 2023, indicating a reduction in Silicon Laboratories Inc's immediate ability to settle its short-term obligations solely with cash on hand.
Overall, Silicon Laboratories Inc's liquidity ratios have fluctuated over the past five years, with a general trend of decreasing liquidity levels in 2023 compared to the previous year. It is important for the company to closely monitor its liquidity position to ensure it can meet its short-term obligations effectively.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 168.89 | 35.56 | 52.23 | 56.01 | 122.68 |
Silicon Laboratories Inc's cash conversion cycle has exhibited significant fluctuations over the past five years. As of December 31, 2023, the company's cash conversion cycle has increased to 168.89 days, indicating a substantial delay in converting inventory and receivables into cash. This prolonged cash conversion cycle may suggest challenges in efficiently managing working capital and operating cash flows.
In comparison, the cash conversion cycle was significantly lower in the previous years, with the lowest value of 35.56 days recorded on December 31, 2022. This indicates that the company was more efficient in managing its inventory, accounts receivable, and accounts payable during that period, resulting in quicker cash conversion.
The sharp increase in the cash conversion cycle from 2022 to 2023 may raise concerns about Silicon Laboratories Inc's ability to effectively manage its working capital and generate cash from its operating activities. It is important for the company to assess the underlying reasons for this increase and implement suitable strategies to streamline its cash conversion cycle for improved financial performance and liquidity management.