Sensata Technologies Holding NV (ST)

Sensata Technologies Holding Plc's liquidity ratios have shown some fluctuations over the past five years.

1. Current Ratio: The company's current ratio has varied from 1.99 to 3.68 during this period, with the highest being in 2021. A current ratio above 1 indicates that Sensata Technologies Holding Plc has more than enough current assets to cover its current liabilities, which is a positive sign of short-term financial health.

2. Quick Ratio: The quick ratio has ranged from 1.69 to 2.98 over the same period. This ratio measures the ability of a company to cover its short-term obligations with its most liquid assets. Sensata Technologies Holding Plc's quick ratio remained above 1 in all years, suggesting a strong ability to meet short-term liabilities without relying on inventory sales.

3. Cash Ratio: The cash ratio, which measures a company's ability to cover its short-term liabilities with its cash and cash equivalents, fluctuated between 0.78 and 2.19. A cash ratio above 1 indicates that the company holds enough cash to cover its short-term obligations, although it has decreased over the years from 2019 to 2023.

Overall, Sensata Technologies Holding Plc has maintained relatively healthy liquidity ratios, indicating its ability to meet short-term obligations efficiently. However, the downward trend in the cash ratio should be monitored, as it may suggest a decreasing ability to cover short-term liabilities with cash and cash equivalents.

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Additional liquidity measure

The cash conversion cycle of Sensata Technologies Holding Plc has shown a fluctuating trend over the past five years. In 2023, the cash conversion cycle increased to 97.21 days from 82.50 days in 2022, indicating a decrease in efficiency in converting company resources into cash. This could be a cause for concern as it suggests a longer time for the company to convert its investments in inventory and accounts receivable into cash inflows.

Comparing the data with previous years, there was a slight improvement from 2020 to 2021, with the cycle decreasing from 78.94 days to 80.96 days. However, this improvement was not sustained, as evidenced by the increase in 2022 and 2023.

Overall, the cash conversion cycle for Sensata Technologies Holding Plc has shown inconsistency in recent years, with a general trend of lengthening. This may indicate inefficiencies in managing inventory, collecting receivables, and managing payables, which could impact the company's liquidity and working capital management. Management should closely monitor and address the factors contributing to the elongation of the cash conversion cycle to ensure optimal cash flow efficiency.