Teradyne Inc (TER)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 2.91 | 3.09 | 2.80 | 3.75 | 3.28 | 3.28 | 3.17 | 3.36 | 3.03 | 3.03 | 2.85 | 3.33 | 3.23 | 3.35 | 2.74 | 3.64 | 3.45 | 3.34 | 2.86 | 3.31 |
| Quick ratio | 0.96 | 0.93 | 0.74 | 1.36 | 1.24 | 1.12 | 1.06 | 1.18 | 1.20 | 1.11 | 0.98 | 1.51 | 1.71 | 1.74 | 1.25 | 1.91 | 2.05 | 1.84 | 1.31 | 1.57 |
| Cash ratio | 0.96 | 0.93 | 0.74 | 1.36 | 1.24 | 1.12 | 1.06 | 1.18 | 1.20 | 1.11 | 0.98 | 1.51 | 1.71 | 1.74 | 1.25 | 1.91 | 2.05 | 1.84 | 1.31 | 1.57 |
The liquidity ratios of Teradyne Inc, as reflected in its financial statements, demonstrate the company's ability to meet its short-term obligations.
1. Current Ratio: The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Teradyne Inc has maintained a consistently healthy current ratio over the analyzed period, ranging from 2.74 to 3.75. This indicates that the company has more than enough current assets to meet its short-term obligations. The highest current ratio recorded was 3.75 on March 31, 2024, indicating a strong liquidity position at that point in time.
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 Inc's quick ratio ranged from 0.74 to 2.05 during the analyzed period. The company's quick ratio generally decreased over time, reaching its lowest point of 0.74 on June 30, 2024. This indicates a decreased ability to cover short-term liabilities with the most liquid assets.
3. Cash Ratio: The cash ratio is the most conservative liquidity ratio, measuring a company's ability to cover its current liabilities with cash and cash equivalents alone. Teradyne Inc's cash ratio ranged from 0.74 to 2.05 over the analyzed period. The company's cash ratio mirrored the trend of the quick ratio, showing a decrease over time and hitting its lowest point of 0.74 on June 30, 2024.
In conclusion, while Teradyne Inc has maintained a strong current ratio throughout the period, indicating a solid ability to meet short-term obligations, there has been a trend of decreasing quick and cash ratios. This suggests that the company may have become less liquid over time in terms of its ability to pay off its short-term liabilities with highly liquid assets. Investors and analysts may want to further investigate the reasons behind this trend to assess the company's overall liquidity position.
See also:
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 92.89 | 93.65 | 240.41 | 101.26 | 99.61 | 277.62 | 105.79 | 102.73 | 92.11 | 84.99 | 78.63 | 64.10 | 59.36 | 56.55 | 57.78 | 70.60 | 60.72 | 53.80 | 64.05 | 63.76 |
The cash conversion cycle of Teradyne Inc has fluctuated over the years based on the data provided. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
In the data provided, we can observe that the cash conversion cycle for Teradyne Inc ranged from a low of 53.80 days in September 2020 to a high of 277.62 days in September 2023. This indicates significant variability in the company's ability to efficiently manage its working capital during this period.
Generally, a shorter cash conversion cycle is desirable as it implies that the company is able to quickly turn its investments into cash. Conversely, a longer cash conversion cycle can indicate inefficiencies in managing inventory, collecting receivables, or deferring payables.
It's important for Teradyne Inc to carefully monitor its cash conversion cycle and work towards improving efficiency in managing working capital. Strategies such as optimizing inventory levels, negotiating favorable payment terms with suppliers, and improving collection times from customers can help reduce the cash conversion cycle and enhance the company's overall financial health.