Synaptics Incorporated (SYNA)

Analyzing Synaptics Incorporated's liquidity ratios over the past five years reveals fluctuations in the company's short-term solvency position.

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its current assets.
- Synaptics demonstrated a fluctuating trend in this ratio, ranging from 1.50 in 2021 to 4.89 in 2023, and stood at 4.19 as of June 30, 2024.
- An increasing current ratio generally indicates improved liquidity and better ability to meet short-term obligations. However, a very high ratio might suggest inefficient utilization of assets.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventories from current assets.
- Like the current ratio, Synaptics' quick ratio also displayed variability over the years, ranging from 1.35 in 2021 to 4.22 in 2023, and was reported at 3.68 as of June 30, 2024.
- A quick ratio above 1 indicates that the company can cover its short-term obligations without relying on selling inventory, which is generally favorable.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity metric as it only considers cash and cash equivalents to cover current liabilities.
- Synaptics' cash ratio also exhibited fluctuations, with values ranging from 1.06 in 2021 to 3.59 in 2023, and settled at 3.16 as of June 30, 2024.
- A higher cash ratio implies a stronger ability to settle short-term liabilities promptly using cash on hand, which may indicate financial stability.

In summary, Synaptics' liquidity ratios have shown variability over the past five years. While the company's current, quick, and cash ratios have generally improved since 2021, leading to better short-term solvency, it is essential for stakeholders to monitor these ratios continuously to ensure liquidity remains at optimal levels.

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Additional liquidity measure

Synaptics Incorporated's cash conversion cycle has shown some fluctuation over the past five years. The company's cash conversion cycle has decreased from 65.75 days in 2020 to 71.29 days in 2024. This indicates that in 2024, it takes Synaptics approximately 71.29 days to convert its investments in raw materials and production into cash from sales.

The trend indicates that the company's efficiency in managing its working capital has improved overall, although there was a slight increase in the cash conversion cycle in 2024 compared to the previous year. This suggests that in 2024, Synaptics may be taking longer to convert its inventory and accounts receivable into cash, potentially indicating inefficiencies in its working capital management compared to previous years.

Overall, although there has been some variability in the cash conversion cycle, it is important for Synaptics to continue monitoring and managing its working capital efficiently to ensure optimal cash flow and liquidity in the future.