Sensata Technologies Holding NV (ST)

Sensata Technologies Holding NV's liquidity ratios show a declining trend over the years. The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, decreased from 4.00 in 2020 to 2.85 in 2024. This indicates a slight deterioration in the company's short-term liquidity position.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also decreased significantly from 2.50 in 2020 to 0.83 in 2024. This suggests that Sensata Technologies may have difficulty meeting its short-term obligations without relying on selling inventory.

Lastly, the cash ratio, which assesses the company's ability to cover immediate liabilities with its cash and cash equivalents, followed a similar downward trend from 2.50 in 2020 to 0.83 in 2024. This decline may raise concerns about the company's ability to handle unforeseen expenses or financial emergencies without relying on other current assets.

Overall, the decreasing trend in Sensata Technologies Holding NV's liquidity ratios indicates a potential deterioration in the company's short-term financial health and highlights the importance of closely monitoring its liquidity management strategies.

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Additional liquidity measure

The cash conversion cycle of Sensata Technologies Holding NV has seen a gradual increase over the past five years. Starting at 77.68 days as of December 31, 2020, it rose to 84.45 days by December 31, 2021, and continued to climb to 86.79 days by December 31, 2022. By December 31, 2023, the cash conversion cycle reached 93.25 days, indicating a longer period for the company to convert its investments in inventory and accounts receivable into cash. However, there was a slight improvement by December 31, 2024, as the cycle decreased to 80.76 days compared to the previous year.

Overall, the upward trend in the cash conversion cycle suggests that Sensata Technologies Holding NV may be facing challenges in efficiently managing its working capital and liquidity. The company may need to focus on streamlining its inventory and accounts receivable processes to shorten the cash conversion cycle and improve its cash flow efficiency in the future.