Teradyne Inc (TER)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 2.91 | 3.28 | 3.03 | 3.23 | 3.45 |
| Quick ratio | 0.96 | 1.24 | 1.20 | 1.71 | 2.05 |
| Cash ratio | 0.96 | 1.24 | 1.20 | 1.71 | 2.05 |
Teradyne Inc's liquidity ratios show a consistent trend over the years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, decreased from 3.45 in 2020 to 2.91 in 2024. While the current ratio remains above 2, indicating good short-term liquidity, the decreasing trend warrants attention.
The quick ratio, a more stringent measure of liquidity excluding inventory, also saw a decline from 2.05 in 2020 to 0.96 in 2024. This indicates a decreasing ability to quickly cover current liabilities with more liquid assets.
Similarly, the cash ratio, measuring the company's ability to cover current liabilities with cash and cash equivalents, decreased from 2.05 in 2020 to 0.96 in 2024. This indicates a decline in the company's ability to meet short-term obligations using its most liquid assets.
Overall, while Teradyne Inc maintains good liquidity levels with current ratios above 2, the decreasing trend in both quick and cash ratios over the years raises concerns about the company's ability to meet short-term obligations using its most liquid assets. Further monitoring and analysis of the company's liquidity position may be necessary to ensure financial stability.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 93.04 | 99.29 | 92.11 | 59.36 | 60.72 |
The cash conversion cycle of Teradyne Inc has shown some fluctuation over the years. As of December 31, 2020, the company's cash conversion cycle was 60.72 days, which decreased slightly to 59.36 days by December 31, 2021. However, there was a significant increase to 92.11 days by December 31, 2022, followed by a further rise to 99.29 days by December 31, 2023. Subsequently, there was a slight decrease to 93.04 days by December 31, 2024.
Overall, the trend indicates a slightly longer cash conversion cycle in recent years, which could imply potential challenges in efficiently converting company resources into cash. A longer cash conversion cycle may indicate inefficiencies in managing accounts receivable, inventory, and accounts payable, potentially affecting the company's liquidity and working capital management. Teradyne Inc may need to focus on improving its working capital processes to enhance its cash conversion efficiency.