Sensata Technologies Holding NV (ST)

The current ratio of Sensata Technologies Holding NV has shown some fluctuations over the years, ranging from a high of 4.33 in September 30, 2020 to a low of 1.77 in June 30, 2024. This ratio indicates the company's ability to cover its short-term obligations with its current assets, with a higher ratio generally indicating better liquidity. Although there have been some declines in the current ratio in recent quarters, it has mostly remained above 2, suggesting that the company has had a relatively strong ability to meet its short-term obligations.

In contrast, the quick ratio, which excludes inventory from current assets, has generally been lower than the current ratio. This ratio also experienced fluctuations over the years, showing a similar pattern to the current ratio. The quick ratio provides a more conservative measure of liquidity, as it reflects the company's ability to meet short-term obligations without relying on inventory. Despite the variability, the quick ratio has generally remained above 1, indicating that Sensata Technologies has been able to cover its short-term liabilities with its most liquid assets.

The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, has also followed a similar trend to the current and quick ratios. The cash ratio provides insight into the company's ability to repay its short-term obligations using only its cash resources. Sensata Technologies Holding NV has maintained a cash ratio above 1 in most periods, indicating a strong ability to cover its short-term liabilities with its cash holdings.

Overall, based on the analysis of the current ratio, quick ratio, and cash ratio, Sensata Technologies Holding NV appears to have maintained a generally sound liquidity position over the years, with the ability to meet its short-term obligations using its current assets and cash resources.

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Additional liquidity measure

The cash conversion cycle measures how efficiently a company is able to convert its resources into cash. It is calculated by adding the number of days it takes for a company to sell inventory, collect receivables, and then subtracting the number of days it takes to pay its payables.

For Sensata Technologies Holding NV, the cash conversion cycle has shown some fluctuations over the past few years. The cycle ranged from a low of 75.53 days in June 2021 to a high of 92.81 days in September 2022. This indicates that the company's efficiency in managing its working capital has varied.

In general, a shorter cash conversion cycle is favorable as it means the company is able to generate cash more quickly, indicating efficient operations. Conversely, a longer cycle could imply that the company is holding onto inventory for too long, experiencing delays in receivables collection, or taking longer to pay its suppliers.

Sensata Technologies Holding NV should aim to reduce its cash conversion cycle by streamlining its processes for inventory management, accounts receivable, and accounts payable. This could help improve the company's liquidity position and overall efficiency in utilizing its resources.