Veeco Instruments Inc (VECO)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 3.24 | 2.59 | 2.90 | 4.00 | 4.03 |
| Quick ratio | 1.87 | 1.65 | 1.76 | 2.72 | 2.45 |
| Cash ratio | 1.40 | 1.17 | 1.18 | 2.18 | 2.07 |
Veeco Instruments Inc's liquidity ratios have shown some fluctuations over the past five years.
1. Current Ratio: The current ratio measures a company's ability to pay its short-term obligations with its current assets. Veeco's current ratio has generally been above 2.0, indicating a strong ability to meet its short-term liabilities. However, in 2023, the current ratio increased significantly to 3.24 from 2.59 in 2022, suggesting an improvement in liquidity compared to the previous year.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, is a more conservative measure of liquidity that excludes inventories from current assets. Veeco's quick ratio has also been above 1.0, signaling a satisfactory ability to cover its short-term obligations without relying on inventory. Similar to the current ratio, the quick ratio improved in 2023 to 2.15 from 1.79 in 2022.
3. Cash Ratio: The cash ratio is the most stringent liquidity measure as it only considers cash and cash equivalents to cover current liabilities. Veeco's cash ratio has been consistently above 1.0, indicating a strong ability to settle short-term obligations with readily available cash. The cash ratio increased in 2023 to 1.68 from 1.31 in 2022, further strengthening the company's liquidity position.
In conclusion, Veeco Instruments Inc has demonstrated overall solid liquidity over the past five years, with improvements in its liquidity ratios in 2023 compared to the previous year. This improved liquidity position suggests that the company has sufficient current assets to meet its short-term obligations effectively.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 215.11 | 188.72 | 178.00 | 185.38 | 152.71 |
Veeco Instruments Inc's cash conversion cycle, which measures the time it takes for the company to convert its investment in inventory into cash from sales, has shown some fluctuations over the past five years.
In 2023, the cash conversion cycle increased to 243.29 days from 217.76 days in 2022, indicating that the company took longer to convert its inventory into cash during the year. This may suggest issues related to inventory management or delays in collecting receivables from customers.
Comparing to 2021, the cash conversion cycle increased by 39.4 days in 2023. This significant increase can be concerning as it indicates a lengthening of the time it takes for Veeco Instruments Inc to generate cash from its operating cycle.
In 2020, the cash conversion cycle was higher than the previous year at 221.95 days, showing a prolonged cash conversion process. However, despite the increase in 2023, the cycle in 2020 remains higher.
In 2019, the company had the lowest cash conversion cycle at 195.98 days over the past five years. This indicates that Veeco Instruments Inc was more efficient in managing its inventory and collecting cash from sales during that year.
Overall, Veeco Instruments Inc should closely monitor its inventory turnover, accounts receivable collection, and payment to suppliers to optimize its cash conversion cycle and improve its working capital management.