STAAR Surgical Company (STAA)

STAAR Surgical Company has maintained strong liquidity ratios over the past five years, indicating a healthy ability to meet its short-term obligations. The current ratio, which measures the company's ability to pay off current liabilities with current assets, has consistently increased from 5.07 in 2019 to 5.62 in 2023. This suggests that the company has ample current assets to cover its current liabilities.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown a positive trend, increasing from 4.40 in 2019 to 4.89 in 2023. This indicates that STAAR Surgical Company has a strong ability to meet its short-term obligations using its most liquid assets.

The cash ratio, which is the most conservative measure of liquidity as it considers only cash and cash equivalents as a proportion of current liabilities, has remained relatively stable over the years, ranging from 3.48 in 2019 to 3.39 in 2023. While this ratio is lower compared to the current and quick ratios, it still highlights the company's ability to cover its short-term liabilities with its cash reserves.

Overall, STAAR Surgical Company's liquidity ratios demonstrate a sound financial position with ample resources to meet its short-term obligations and fund its ongoing operations.

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Additional liquidity measure

STAAR Surgical Company's cash conversion cycle has fluctuated over the past five years. In 2023, the cash conversion cycle increased to 406.66 days from 303.41 days in 2022, indicating a deterioration in the company's ability to convert its investments in inventory and accounts receivable into cash. This lengthening of the cash conversion cycle may suggest inefficiencies in managing inventory and collecting receivables, leading to a longer period for the company to realize cash from its operating activities.

Comparing to 2021 and 2020, the cash conversion cycle was higher in 2023 but slightly lower than in 2019. The company experienced its most efficient cash conversion cycle in 2018, with 254.51 days, but has since seen an increase in the number of days it takes to convert its working capital into cash.

The analysis of the cash conversion cycle can give insights into the company's liquidity and operational efficiency. A longer cycle generally indicates potential liquidity challenges and inefficiencies in the management of working capital, which could impact the company's overall financial health and performance. STAAR Surgical Company may need to focus on streamlining its operations, improving inventory management, and accelerating accounts receivable collections to reduce its cash conversion cycle and enhance its liquidity position.