Texas Instruments Incorporated (TXN)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 4.12 | 4.55 | 4.70 | 5.33 | 4.28 |
| Quick ratio | 2.08 | 2.58 | 3.04 | 3.79 | 2.75 |
| Cash ratio | 2.08 | 2.58 | 3.04 | 3.79 | 2.75 |
Texas Instruments Incorporated has demonstrated strong liquidity performance over the years based on its liquidity ratios. The current ratio, which reflects the company's ability to meet short-term obligations using its current assets, has shown a positive trend, increasing from 4.28 in 2020 to 4.12 in 2024. This indicates that the company has sufficient current assets to cover its current liabilities.
Similarly, the quick ratio, also known as the acid-test ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also exhibited a positive trend, rising from 2.75 in 2020 to 2.08 in 2024. This suggests that the company's ability to meet its short-term obligations without relying on inventory has been improving.
The cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, has remained relatively stable over the years, ranging between 2.08 and 3.79. This indicates that Texas Instruments has maintained a solid cash position to meet its immediate payment obligations.
Overall, Texas Instruments' liquidity ratios demonstrate a strong financial position with ample liquidity to meet its short-term obligations and maintain ongoing operations.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 252.38 | 224.56 | 160.83 | 116.81 | 137.44 |
The cash conversion cycle of Texas Instruments Incorporated has fluctuated over the years based on the provided data. As of December 31, 2020, the company's cash conversion cycle stood at 137.44 days. By December 31, 2021, the cycle improved to 116.81 days, indicating a faster conversion of inventory to cash.
However, in the following years, there was a significant increase in the cash conversion cycle. By December 31, 2022, the cycle extended to 160.83 days, suggesting that the company took longer to convert its inventory and receivables into cash. The trend continued with a further increase to 224.56 days by December 31, 2023, and to 252.38 days by December 31, 2024.
This gradual elongation of the cash conversion cycle may raise concerns about liquidity management and operational efficiency within Texas Instruments Incorporated. The company may need to assess its inventory management, credit policies, and cash flow processes to potentially shorten the cycle and improve cash flow dynamics in the future.