Zebra Technologies Corporation (ZBRA)

The liquidity ratios of Zebra Technologies Corporation have shown varying trends over the past five years.

1. Current Ratio: The current ratio measures the company's ability to meet its short-term obligations with its current assets. Zebra Technologies' current ratio has increased from 0.69 in 2020 to 1.43 in 2024, indicating an improvement in its short-term liquidity position. A current ratio above 1 suggests that the company has more current assets than current liabilities, which is generally considered favorable.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Zebra Technologies' quick ratio has fluctuated over the years, with a low of 0.43 in 2022 and a peak of 1.01 in 2024. A quick ratio above 1 indicates that the company can cover its short-term liabilities without relying on the sale of inventory.

3. Cash Ratio: The cash ratio focuses solely on the most liquid assets, cash and cash equivalents, compared to the current liabilities. Zebra Technologies' cash ratio has also shown variability, ranging from 0.09 in 2022 to 0.59 in 2024. A higher cash ratio suggests that the company has a higher proportion of cash to meet its short-term obligations.

Overall, Zebra Technologies Corporation's liquidity ratios have generally improved over the years, with increasing current, quick, and cash ratios. This indicates that the company has enhanced its ability to meet its short-term financial commitments and suggests a more robust liquidity position.

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Additional liquidity measure

The cash conversion cycle (CCC) of Zebra Technologies Corporation has experienced fluctuations over the most recent years. As of December 31, 2020, the CCC stood at 34.25 days, indicating that the company takes approximately 34 days to convert its investments in inventory and other resources into cash flows from sales.

By December 31, 2021, the CCC improved to 31.00 days, suggesting that Zebra Technologies Corporation managed its working capital more efficiently, reducing the time needed to convert resources into cash.

However, by the end of December 31, 2022, the CCC increased significantly to 54.24 days, signaling a prolonged period for the company to convert its resources into cash flows. This could indicate potential challenges in managing inventory or extending credit terms to customers, affecting the company's liquidity position.

The trend continued as of December 31, 2023, with the CCC reaching 81.26 days, reflecting a further delay in the cash conversion process. A higher CCC may signal inefficiencies in the company's operations, such as slow inventory turnover or difficulties in collecting receivables promptly.

As of December 31, 2024, the CCC improved slightly to 57.97 days but remained elevated compared to previous years. It is essential for Zebra Technologies Corporation to closely monitor and improve its cash conversion cycle to enhance liquidity, optimize working capital management, and ensure sustainable business operations in the long run.