Sandisk Corp (SNDK)

The liquidity ratios of Sandisk Corp over the specified periods reveal a changing pattern in the company's short-term financial health. The current ratio, which measures the ability to meet short-term obligations with total current assets, was notably strong at 2.82 as of December 31, 2015. This ratio declined significantly by June 30, 2022, reaching 1.79, indicating a reduction in the company's capacity to cover current liabilities with its current assets. The downward trend continued through June 30, 2023, with the ratio decreasing further to 1.56, suggesting a potential tightening of liquidity. However, an increase was observed by June 30, 2024, with the ratio ascending to 1.67, and a substantial improvement was recorded by June 30, 2025, reaching 3.56. This sharp increase indicates a significant enhancement in the company's ability to meet short-term liabilities with current assets.

The quick ratio, which assesses liquidity excluding inventories and relying primarily on the most liquid assets, followed a similar trend. It was at a robust 2.00 at the end of 2015 but fell sharply to 0.65 by June 30, 2022. This decrease signals a diminished capacity to cover immediate liabilities without liquidating inventory or other less liquid assets. The quick ratio further declined to 0.38 by June 30, 2023, reflecting a tighter liquidity position. It then increased modestly to 0.59 as of June 30, 2024, before rising significantly to 1.79 by June 30, 2025, indicating a restored and stronger liquidity position in terms of liquid assets relative to current liabilities.

The cash ratio, which measures the company's ability to settle current liabilities strictly with cash and cash equivalents, showed a dramatic decline from 2.00 at December 31, 2015, to 0.13 by June 30, 2022 and 2023, reflecting a substantial reduction in cash holdings relative to current liabilities. The ratio remained at 0.13 in mid-2024 before increasing markedly to 1.04 by June 30, 2025, suggesting that the company significantly enhanced its liquidity position through increased cash reserves or equivalents.

In summary, Sandisk Corp experienced a period of reduced liquidity from 2015 to 2023, particularly evident in the quick and cash ratios. Nevertheless, the data indicates a strong recovery and improved liquidity position culminating in 2025, characterized by higher current, quick, and cash ratios. This pattern suggests effective liquidity management or strategic changes, resulting in enhanced ability to meet short-term obligations.

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Additional liquidity measure

The analysis of Sandisk Corp’s cash conversion cycle (CCC) over the specified period reveals a notable upward trend, indicative of increasing operating cycle duration and potentially shifting operational efficiency or working capital management.

As of December 31, 2015, the CCC was approximately 89.31 days, reflecting the time taken from cash outlay for inventory acquisition to cash recovery from sales. By June 30, 2022, this cycle extended to approximately 115.74 days, demonstrating an increase of roughly 26.43 days over six and a half years. This elongation suggests the company faced longer inventory holding periods, extended receivable collection times, or both, resulting in a less efficient cash turnover cycle compared to earlier periods.

The trend continued into June 30, 2023, with the CCC reaching approximately 138.35 days. The further increase of about 22.61 days within a year indicates a significant slowdown in operational cash flow convertibility. It may reflect strategies such as increased inventory levels, longer receivables collection periods, or alterations in supplier payment terms, all contributing to a lengthier cycle.

Between June 30, 2023, and June 30, 2024, the CCC saw a slight decrease to approximately 135.11 days, a reduction of about 3.24 days. This minor contraction could denote operational adjustments aimed at improving cash flow efficiencies, perhaps through tighter inventory management or receivables collection efforts.

However, the most conspicuous change occurred between June 30, 2024, and June 30, 2025, where the CCC sharply increased to approximately 174.57 days. This surge of nearly 39.46 days indicates a substantial prolongation of the operating cycle, suggesting potential challenges in inventory turnover, receivables collection, or changes in supplier terms that have accumulated over the period.

In summary, Sandisk Corp’s cash conversion cycle has exhibited a generally increasing trend over the analyzed period, with notable fluctuations. The overall elongation of the CCC signifies that it takes progressively longer for the company to convert cash invested in operations back into cash received from sales, which could have implications for liquidity management and operational efficiency. This trend warrants further detailed examination of underlying factors such as inventory management policies, receivables collection practices, and supplier credit terms to accurately assess operational performance and financial health.