Semtech Corporation (SMTC)

Semtech Corporation's liquidity ratios have shown some fluctuations over the years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has been relatively stable, with a slight increase from 1.82 in January 2023 to 2.07 in January 2025.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. Semtech Corporation's quick ratio has varied more significantly, from 0.63 in January 2023 to 0.58 in January 2025, with some improvement in between.

The cash ratio, indicating the proportion of current liabilities that could be covered by cash and cash equivalents alone, has remained relatively consistent at around 0.63 to 0.66 from January 2023 to January 2024, before decreasing to 0.58 in January 2025.

Overall, Semtech Corporation has demonstrated decent liquidity levels, as indicated by its current ratio consistently above 1, suggesting it can meet its short-term obligations. However, the decreasing trend in the quick and cash ratios indicates a potential need for the company to more efficiently manage its short-term liquidity in the future.

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Additional liquidity measure

The cash conversion cycle of Semtech Corporation has shown fluctuations over the past few years. In January 2023, the cash conversion cycle was 148.31 days, indicating that it took the company approximately 148 days to convert its investments in inventory and other resources into cash receipts from sales. This number increased significantly to 272.73 days by January 2023, suggesting potential inefficiencies in managing working capital.

However, the company managed to improve its cash conversion cycle significantly in the following years. By January 2024, the cycle was reduced to 93.05 days, and then further decreased to 92.44 days by January 2025. These reductions indicate that Semtech Corporation became more efficient in converting its resources into cash, possibly through better inventory management, faster collection of receivables, or extending payment terms to suppliers.

Overall, a decreasing trend in the cash conversion cycle is positive as it signifies improved cash flow management and working capital efficiency. Semtech Corporation's ability to consistently lower its cash conversion cycle over the years demonstrates a positive trend in its operational efficiency and liquidity management.