Super Micro Computer Inc (SMCI)

The liquidity ratios of Super Micro Computer Inc. exhibit a generally stable trend over the analyzed period, with distinct variations reflecting operational and financial changes.

The current ratio, which measures the company's ability to meet short-term obligations with its current assets, shows an initial decline from 2.51 as of September 30, 2020, to a low of 1.79 by March 2022. Subsequently, it increased steadily reaching a peak of 6.66 by March 2025. The ratio's fluctuation indicates periods of tightening and strengthening liquidity, with recent ratios substantially higher than historical averages. The notably elevated ratios towards the end of the period suggest a significant accumulation of current assets relative to current liabilities, possibly reflecting a strategy to maintain high liquidity buffers.

The quick ratio, which refines the liquidity assessment by excluding inventory from current assets, followed a similar pattern. It decreased from 1.06 in September 2020 to around 0.62 in early 2022, indicating less immediate liquidity during that period. From 2022 onward, the quick ratio demonstrated a marked increase, reaching over 3.6 by March 2025, signifying improved ability to meet short-term obligations without relying on inventory sales. The trend highlights a strengthening of liquid assets readily available to the company.

The cash ratio, representing the most conservative measure of liquidity by considering cash and cash equivalents only, reveals more volatility. It declined from 0.51 in September 2020 to a low of approximately 0.17–0.24 during 2021 and early 2022. Starting in 2023, the cash ratio experienced substantial growth, surpassing 1.0 by March 2024 and reaching 2.20 in June 2025. This surge indicates a significant increase in cash reserves relative to current liabilities, which enhances the company's liquidity position and financial flexibility.

Overall, the liquidity profile of Super Micro Computer Inc. has improved markedly over recent years. The escalating ratios suggest a strategic build-up of liquid assets, including cash, to support operational needs and safeguard against potential financial uncertainties. The upward trend in all three ratios, especially in the most conservative measures (quick and cash ratios), underscores a robust liquidity position in the current period compared to earlier years, reflecting effective liquidity management and prudent financial planning.

---

See also:

Super Micro Computer Inc Liquidity Ratios (Quarterly Data)

---

Additional liquidity measure

The analysis of Super Micro Computer Inc.'s cash conversion cycle (CCC) over the specified periods reveals notable fluctuations, indicative of changes in operational efficiency, inventory management, and receivables and payables practices.

Between September 2020 and December 2020, the CCC experienced a marginal decline from 93.60 days to 90.96 days, reflecting a slight improvement in the company's liquidity management. However, starting in Q1 2021, the cycle increased steadily, reaching approximately 99.71 days by March 2021 and maintaining around 99.35 days in June 2021, indicating a period of relative stability.

From September 2021 onward, the CCC exhibits an upward trend, peaking sharply at 114.37 days in December 2021 and further escalating to approximately 132.53 days by June 2022. This trend suggests a lengthening of the time taken to convert investments in inventory and receivables into cash, possibly due to extended receivables collection periods, increased inventory holding times, or delays in payment to suppliers.

Subsequent quarters show some contraction, with the CCC decreasing to about 114.02 days in September 2022 and further to 99.77 days in December 2022. This reduction indicates a period of improved working capital management, although the cycle remains higher compared to earlier periods.

From early 2023 through the third quarter, the CCC stabilizes around the mid to high 90s to low 100s days, with values such as 98.33 days in March 2023 and 100.63 days in June 2023. However, a significant escalation occurs in Q4 2023, with the cycle rising to 116.16 days, and further extending dramatically to 162.38 days in March 2024. This sharp increase indicates a substantial deterioration in cash conversion efficiency, potentially caused by extended inventories, slow receivables collection, or delayed payables.

Looking into the more recent periods, there is a gradual reduction, with the CCC decreasing to approximately 145.81 days in June 2024 and 125.64 days in September 2024. Although the trend suggests some stabilization, the cycle remains elevated relative to historical averages.

In the latest data for December 2024 and March 2025, the CCC continues to decline, reaching 114.64 days and then approximately 106.52 days in March 2025. The trend indicates ongoing efforts to improve cash flow management, but the cycle still remains somewhat inflated compared to pre-2021 levels.

Overall, Super Micro Computer Inc.'s cash conversion cycle has experienced periods of both stability and significant fluctuation over the analyzed timeframe. The most notable surge in the cycle in early 2024 reflects potential operational challenges or strategic shifts impacting liquidity. The recent downward trend suggests some recovery efforts, though the current cycle remains above earlier levels, signifying room for further optimization in working capital management.