Varex Imaging Corp (VREX)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 4.30 | 4.04 | 4.03 | 3.93 | 3.86 | 3.52 | 3.44 | 3.41 | 3.72 | 3.33 | 3.01 | 3.62 | 3.43 | 3.25 | 2.60 | 2.29 | 2.31 | 2.50 | 2.58 | 2.80 |
| Quick ratio | 2.22 | 2.20 | 1.99 | 1.77 | 1.63 | 1.60 | 0.58 | 0.69 | 1.90 | 1.80 | 0.69 | 1.09 | 1.01 | 1.71 | 0.72 | 0.12 | 0.16 | 0.17 | 0.17 | 0.20 |
| Cash ratio | 1.29 | 1.19 | 0.96 | 0.75 | 0.62 | 0.60 | 0.58 | 0.69 | 1.05 | 0.87 | 0.69 | 1.09 | 1.01 | 0.94 | 0.72 | 0.12 | 0.16 | 0.17 | 0.17 | 0.20 |
Varex Imaging Corp's liquidity ratios have shown stability and improvement over the period analyzed. The current ratio has consistently been above 3, indicating a strong ability to meet short-term obligations with current assets. The current ratio peaked at 4.30 on December 31, 2023, which suggests a robust liquidity position.
The quick ratio has also shown improvement, reflecting the company's ability to cover immediate liabilities with its most liquid assets. The quick ratio increased from 1.63 on December 31, 2022, to 2.22 on December 31, 2023, signaling enhanced liquidity and financial health.
Additionally, the cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, has increased steadily, reaching 1.29 on December 31, 2023. This indicates that Varex Imaging Corp has sufficient liquid resources to meet its short-term obligations without relying on selling inventory or receivables.
Overall, the liquidity ratios for Varex Imaging Corp demonstrate a healthy financial position with a strong ability to cover short-term liabilities, maintain operations, and weather potential financial challenges.
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 196.34 | 201.40 | 197.14 | 208.77 | 212.85 | 215.74 | 141.00 | 124.61 | 169.86 | 179.72 | 126.95 | 208.57 | 210.58 | 257.67 | 194.50 | 133.58 | 131.80 | 132.37 | 113.14 | 120.82 |
The cash conversion cycle of Varex Imaging Corp has fluctuated over the past years, reflecting changes in the company's efficiency in managing its working capital. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
In analyzing the trend, we observe that the company's cash conversion cycle peaked at 257.67 days in the third quarter of 2020, indicating a prolonged period of time to convert resources into cash. Subsequently, there was a significant improvement in the efficiency of managing working capital, with the cycle decreasing to 124.61 days in the first quarter of 2022, reflecting a more effective conversion of investments into cash flows.
However, there has been some volatility in the cycle since then, with fluctuations observed in subsequent quarters. The latest reported cash conversion cycle of 196.34 days, as of December 31, 2023, indicates a moderate increase compared to the previous quarter. This suggests that Varex Imaging Corp may be facing challenges in optimizing its working capital efficiency.
It is important for the management of Varex Imaging Corp to closely monitor and effectively manage its cash conversion cycle to ensure a balance between liquidity, profitability, and operational efficiency. By enhancing inventory management, accounts receivable collection, and accounts payable management, the company can strive to shorten its cash conversion cycle and improve its overall financial performance.