Teradyne Inc (TER)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 3.28 | 3.03 | 3.20 | 3.45 | 3.08 |
| Quick ratio | 1.88 | 1.86 | 2.38 | 2.76 | 2.36 |
| Cash ratio | 1.24 | 1.20 | 1.70 | 2.05 | 1.69 |
The liquidity ratios of Teradyne, Inc. over the past five years indicate the company's ability to meet its short-term obligations and its overall liquidity position.
1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its current assets.
- Teradyne's current ratio has shown a fluctuating trend over the five-year period, ranging from 3.03 to 3.45.
- A current ratio above 1 indicates that the company has more current assets than current liabilities, with a higher ratio suggesting a stronger liquidity position.
- Despite the fluctuations, Teradyne has consistently maintained a current ratio above 3 in the last three years, indicating a strong ability to meet its short-term obligations.
2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets.
- Teradyne's quick ratio has also shown variability over the past five years, ranging from 2.59 to 3.13.
- A quick ratio above 1 suggests that the company can cover its short-term liabilities without relying on selling inventory.
- Similar to the current ratio, Teradyne has maintained a quick ratio above 2 in the past three years, indicating a healthy liquidity position.
3. Cash Ratio:
- The cash ratio measures the company's ability to cover its current liabilities with cash and cash equivalents.
- Teradyne's cash ratio has exhibited fluctuations from 1.93 to 2.42 over the five-year period.
- A cash ratio above 1 indicates that the company has sufficient cash to cover its short-term obligations.
- Despite the fluctuations, Teradyne has consistently maintained a cash ratio above 2 in the last three years, signifying a strong cash position relative to its current liabilities.
Overall, based on the analysis of liquidity ratios, Teradyne, Inc. has demonstrated strong liquidity levels over the past five years, with consistently high current, quick, and cash ratios. These ratios suggest that the company has sufficient liquid assets to meet its short-term obligations and indicates a robust financial position in terms of liquidity management.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 99.16 | 109.33 | 76.29 | 82.36 | 84.41 |
The cash conversion cycle of Teradyne, Inc. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 99.16 days, which represents the number of days it takes for Teradyne to convert its investments in inventory and other resources into cash flows from sales. This was a decrease from the previous year, indicating an improvement in the efficiency of the company's working capital management.
Comparing to the figures from earlier years, the cash conversion cycle was highest in 2022 at 109.33 days, suggesting a longer time taken to convert investments into cash. However, in 2021, the company managed to decrease the cycle to 76.29 days, showing better efficiency in working capital management. The trend continued in 2020 and 2019, with the cycle standing at 82.36 days and 84.41 days, respectively.
Overall, the downward trend in the cash conversion cycle indicates that Teradyne, Inc. has been able to streamline its operations and enhance its ability to convert resources into cash more effectively over the past few years. This improvement may suggest better inventory management, collections from customers, and more efficient payment to suppliers, all contributing to the company's overall liquidity and financial performance.