Ultra Clean Holdings Inc (UCTT)

Ultra Clean Holdings Inc has maintained a healthy level of liquidity over the five-year period from 2020 to 2024, as indicated by its current ratio, quick ratio, and cash ratio.

The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, has shown a slight fluctuation but generally remained above 2. This suggests that Ultra Clean Holdings has sufficient current assets to cover its current liabilities, providing a buffer for unexpected expenses or downturns in business.

Similarly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also exhibited a stable trend, staying above 1 throughout the period. This implies that the company can meet its short-term liabilities using its most liquid assets, such as cash and accounts receivable, without relying heavily on inventory for liquidity.

Furthermore, the cash ratio, which indicates the company's ability to cover its current liabilities with cash and cash equivalents alone, has been consistently around 1 over the years. This indicates that Ultra Clean Holdings maintains a strong cash position relative to its current liabilities, providing a solid foundation for meeting its short-term financial obligations without relying on other current assets.

Overall, based on these liquidity ratios, Ultra Clean Holdings Inc appears to have a strong liquidity position, with ample resources to cover its short-term obligations and weather potential financial challenges that may arise in the near future.

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Additional liquidity measure

The cash conversion cycle of Ultra Clean Holdings Inc has shown fluctuations over the past five years. As of December 31, 2020, the company's cash conversion cycle was 57.46 days, indicating that it took around 57.46 days for the company to convert its investments in inventory into cash from sales. By December 31, 2021, the cash conversion cycle had improved slightly to 53.55 days, suggesting the company was managing its inventory and accounts receivable more efficiently.

However, there was a significant increase in the cash conversion cycle by December 31, 2022, reaching 75.40 days. This could imply that the company was facing challenges in managing its working capital effectively, possibly due to issues with inventory management or slow collections from customers. The trend continued, with the cash conversion cycle rising to 83.53 days by December 31, 2023, and then decreasing slightly to 77.27 days by December 31, 2024.

Overall, the fluctuating cash conversion cycle of Ultra Clean Holdings Inc indicates potential variability in its operational efficiency and liquidity management over the years. It is important for the company to closely monitor and control its cash conversion cycle to ensure optimal cash flow management and working capital efficiency.