Varex Imaging Corp (VREX)

Varex Imaging Corp's liquidity ratios have shown a favorable trend over the past five years, indicating an improvement in its short-term liquidity position.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has steadily increased from 2.50 in 2019 to 4.04 in 2023. This suggests that Varex Imaging Corp has significantly strengthened its ability to meet its short-term obligations.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also shown improvement over the years. It increased from 0.98 in 2019 to 2.20 in 2023, indicating that the company has a sufficient level of liquid assets to cover immediate liabilities.

Furthermore, the cash ratio, which specifically focuses on the company's ability to cover its current liabilities with cash and cash equivalents, has also improved significantly over the years. Varex Imaging Corp's cash ratio has increased from 0.17 in 2019 to 1.19 in 2023, indicating a strong cash position.

Overall, the consistent improvement in Varex Imaging Corp's liquidity ratios suggests that the company has managed its short-term liquidity effectively and is well-positioned to meet its current obligations.

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Additional liquidity measure

The cash conversion cycle for Varex Imaging Corp has shown fluctuations over the past five years. In the most recent period ending September 30, 2023, the company's cash conversion cycle stood at 195.63 days, representing a decrease from the prior year. This indicates that Varex Imaging Corp has improved its efficiency in managing its cash flows from the sale of inventory and collection of accounts receivable.

Comparing this to the trend in previous years, the company's cash conversion cycle was highest in September 2022 at 216.21 days and lowest in September 2021 at 180.14 days. The fluctuation in the cash conversion cycle suggests that Varex Imaging Corp has experienced varying levels of efficiency in converting its investments in inventory and accounts receivable into cash during these periods.

Overall, a lower cash conversion cycle is generally seen as favorable, as it implies that the company is able to generate cash quickly from its operating cycle. Varex Imaging Corp should continue to monitor and manage its inventory and accounts receivable effectively to maintain a healthy cash conversion cycle and improve its overall financial performance.