Gentherm Inc (THRM)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 2.12 | 2.39 | 2.66 | 3.12 | 2.39 |
| Quick ratio | 1.24 | 1.43 | 1.81 | 2.42 | 1.41 |
| Cash ratio | 0.46 | 0.55 | 0.89 | 1.30 | 0.33 |
Gentherm Inc's liquidity ratios have shown a declining trend over the last five years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, decreased from 3.12 in 2020 to 2.12 in 2023. This indicates that the company may have reduced its current assets relative to its current liabilities.
Similarly, the quick ratio, a more stringent liquidity measure that excludes inventory from current assets, also declined from 2.53 in 2020 to 1.48 in 2023. This suggests that Gentherm Inc may be less able to cover its short-term obligations using its most liquid assets.
The cash ratio, which specifically focuses on the company's ability to pay off current liabilities with cash and cash equivalents, decreased from 1.36 in 2020 to 0.58 in 2023. This indicates that Gentherm Inc's cash position relative to its current liabilities has weakened.
Overall, the declining trend in Gentherm Inc's liquidity ratios raises concerns about its ability to meet its short-term financial obligations. Investors and creditors may want to closely monitor the company's liquidity position and the effectiveness of its working capital management strategies.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 61.21 | 89.10 | 83.52 | 96.28 | 78.59 |
The cash conversion cycle of Gentherm Inc has fluctuated over the past five years, indicating changes in the company's efficiency in managing its cash flow from operating activities. In 2023, the cash conversion cycle decreased to 69.36 days from 98.90 days in 2022, suggesting an improvement in the company's ability to convert its inventories into cash. This may have been due to better inventory management or faster collections from customers.
Compared to 2021 and 2020, where the cash conversion cycle was 90.18 days and 100.09 days respectively, the decrease in 2023 is a positive sign for Gentherm Inc. The company was able to reduce the time it takes to convert its resources into cash during this period. However, it is notable that in 2019, the cash conversion cycle was slightly lower at 89.07 days compared to 2023, indicating that there is still room for further improvement.
Overall, the decreasing trend in the cash conversion cycle of Gentherm Inc over the past few years reflects positively on the company's operational efficiency and cash management practices. It suggests that the company is becoming more effective in managing its working capital and generating cash flow from its core operations.