Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
First Solar Inc., liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Current ratio | 3.55 | 3.65 | 4.39 | 3.56 | 2.73 | |
| Quick ratio | 2.62 | 2.80 | 3.10 | 2.38 | 2.00 | |
| Cash ratio | 1.61 | 2.48 | 2.51 | 2.06 | 1.64 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The analysis of liquidity metrics from 2019 to 2023 indicates a consistently strong short-term financial position, characterized by an ability to cover current liabilities several times over. A general trend of increasing liquidity was observed between 2019 and 2021, followed by a moderate correction and stabilization through 2023.
- Current Ratio
- The current ratio demonstrated a steady ascent from 2.73 in 2019 to a peak of 4.39 in 2021. Following this peak, the ratio declined to 3.65 in 2022 and slightly further to 3.55 in 2023. Despite the post-2021 decline, the ratio remains significantly above the standard 1.0 threshold, suggesting a robust cushion of current assets relative to current obligations.
- Quick Ratio
- The quick ratio followed a trajectory similar to the current ratio, rising from 2.00 in 2019 to 3.10 in 2021, before moderating to 2.62 by the end of 2023. The persistent gap between the current and quick ratios across all five years indicates that a meaningful portion of current assets is comprised of inventory. However, the quick ratio remains high, confirming that the entity can meet its immediate liabilities without relying on the sale of inventory.
- Cash Ratio
- The cash ratio exhibited the most volatility among the three metrics. It increased from 1.64 in 2019 to a peak of 2.51 in 2021 and remained relatively stable at 2.48 in 2022. A more pronounced decrease occurred in 2023, with the ratio falling to 1.61. While this represents a significant reduction from the 2021-2022 period, the ratio still exceeds 1.0, implying that cash and cash equivalents alone are sufficient to cover all current liabilities.
Overall, the alignment of these trends suggests that while the peak liquidity levels achieved in 2021 have normalized, the organization maintains an exceptionally liquid balance sheet. The sharper decline in the cash ratio relative to the current ratio in 2023 suggests a shift in the composition of current assets, likely moving from cash into other current asset categories.
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Current Ratio
First Solar Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 4,634,809) | 3,791,421) | 3,191,243) | 3,014,535) | 3,599,834) | |
| Current liabilities | 1,306,158) | 1,038,048) | 726,878) | 847,398) | 1,318,208) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 3.55 | 3.65 | 4.39 | 3.56 | 2.73 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 2.51 | 2.36 | 2.02 | — | — | |
| Analog Devices Inc. | 1.37 | 2.02 | 1.94 | 1.84 | — | |
| Applied Materials Inc. | 2.60 | 2.16 | 2.54 | 3.00 | — | |
| Broadcom Inc. | 2.82 | 2.62 | 2.64 | 1.87 | — | |
| Intel Corp. | 1.54 | 1.57 | 2.10 | — | — | |
| KLA Corp. | 2.24 | 2.50 | 2.71 | — | — | |
| Lam Research Corp. | 3.16 | 2.69 | 3.30 | — | — | |
| Marvell Technology Inc. | 1.37 | 1.80 | 1.50 | — | — | |
| Micron Technology Inc. | 4.46 | 2.89 | 3.10 | — | — | |
| NVIDIA Corp. | 3.52 | 6.65 | 4.09 | — | — | |
| Qualcomm Inc. | 2.33 | 1.75 | 1.68 | 2.14 | — | |
| Texas Instruments Inc. | 4.55 | 4.70 | 5.33 | — | — | |
| Current Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 2.42 | 2.33 | 2.45 | — | — | |
| Current Ratio, Industry | ||||||
| Information Technology | 1.41 | 1.37 | 1.55 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= 4,634,809 ÷ 1,306,158 = 3.55
2 Click competitor name to see calculations.
The liquidity position of the organization has remained strong over the five-year period ending December 31, 2023, characterized by a substantial buffer of current assets relative to current liabilities.
- Current Assets Trend
- Current assets experienced a slight contraction in 2020 but entered a period of sustained growth thereafter. From a low of US$ 3,014,535 thousand in 2020, assets increased to US$ 4,634,809 thousand by the end of 2023, representing a growth of approximately 54% over three years.
- Current Liabilities Trend
- Current liabilities exhibited a U-shaped pattern, decreasing from US$ 1,318,208 thousand in 2019 to a minimum of US$ 726,878 thousand in 2021. Subsequently, liabilities increased over the next two years, returning to US$ 1,306,158 thousand in 2023, effectively reverting to the levels seen at the start of the analyzed period.
- Current Ratio Analysis
- The current ratio showed a significant upward trajectory between 2019 and 2021, peaking at 4.39. This peak indicates a period of exceptionally high short-term solvency. Although the ratio moderated to 3.65 in 2022 and 3.55 in 2023, it remains comfortably above the 2.73 ratio reported in 2019, suggesting that the organization has maintained a more conservative and robust liquidity profile than it held five years prior.
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Quick Ratio
First Solar Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 1,946,994) | 1,481,269) | 1,450,654) | 1,227,002) | 1,352,741) | |
| Marketable securities | 155,495) | 1,096,712) | 375,389) | 520,066) | 811,506) | |
| Accounts receivable trade, net | 660,776) | 324,337) | 429,436) | 266,086) | 475,039) | |
| Government grants receivable, net | 659,745) | —) | —) | —) | —) | |
| Total quick assets | 3,423,010) | 2,902,318) | 2,255,479) | 2,013,154) | 2,639,286) | |
| Current liabilities | 1,306,158) | 1,038,048) | 726,878) | 847,398) | 1,318,208) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 2.62 | 2.80 | 3.10 | 2.38 | 2.00 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 1.51 | 1.57 | 1.49 | — | — | |
| Analog Devices Inc. | 0.76 | 1.34 | 1.24 | 1.31 | — | |
| Applied Materials Inc. | 1.63 | 1.17 | 1.64 | 1.95 | — | |
| Broadcom Inc. | 2.34 | 2.18 | 2.27 | 1.56 | — | |
| Intel Corp. | 1.01 | 1.01 | 1.38 | — | — | |
| KLA Corp. | 1.33 | 1.57 | 1.81 | — | — | |
| Lam Research Corp. | 1.95 | 1.72 | 2.11 | — | — | |
| Marvell Technology Inc. | 0.88 | 1.20 | 1.19 | — | — | |
| Micron Technology Inc. | 2.53 | 1.92 | 2.17 | — | — | |
| NVIDIA Corp. | 2.61 | 5.96 | 3.56 | — | — | |
| Qualcomm Inc. | 1.51 | 1.01 | 1.34 | 1.75 | — | |
| Texas Instruments Inc. | 3.12 | 3.67 | 4.45 | — | — | |
| Quick Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 1.60 | 1.62 | 1.78 | — | — | |
| Quick Ratio, Industry | ||||||
| Information Technology | 1.12 | 1.09 | 1.30 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 3,423,010 ÷ 1,306,158 = 2.62
2 Click competitor name to see calculations.
The analysis of short-term liquidity reveals a consistently strong position, with the quick ratio remaining well above the 1.0 threshold throughout the five-year period. This indicates a robust ability to meet immediate financial obligations using only the most liquid assets.
- Quick Asset Trends
- Total quick assets experienced an initial decline from US$ 2,639,286 thousand in 2019 to US$ 2,013,154 thousand in 2020. However, a sustained upward trajectory followed, culminating in a peak of US$ 3,423,010 thousand by December 31, 2023. This represents a significant increase in liquid resources over the total period.
- Current Liabilities Dynamics
- Current liabilities showed a downward trend between 2019 and 2021, reaching a low of US$ 726,878 thousand. Following this period, liabilities increased steadily, returning to US$ 1,306,158 thousand by 2023, which is nearly identical to the 2019 level of US$ 1,318,208 thousand.
- Quick Ratio Performance
- The quick ratio peaked in 2021 at 3.10, driven by the simultaneous decrease in current liabilities and the recovery of quick assets. Despite the continued growth in total quick assets through 2022 and 2023, the quick ratio moderated to 2.80 and 2.62, respectively. This decline is attributable to the fact that current liabilities grew at a faster proportional rate than quick assets during the final two years of the period.
Overall, while the quick ratio has declined slightly since its 2021 peak, the liquidity profile remains healthy, providing a substantial cushion for the settlement of short-term debts.
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Cash Ratio
First Solar Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 1,946,994) | 1,481,269) | 1,450,654) | 1,227,002) | 1,352,741) | |
| Marketable securities | 155,495) | 1,096,712) | 375,389) | 520,066) | 811,506) | |
| Total cash assets | 2,102,489) | 2,577,981) | 1,826,043) | 1,747,068) | 2,164,247) | |
| Current liabilities | 1,306,158) | 1,038,048) | 726,878) | 847,398) | 1,318,208) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 1.61 | 2.48 | 2.51 | 2.06 | 1.64 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 0.86 | 0.92 | 0.85 | — | — | |
| Analog Devices Inc. | 0.30 | 0.60 | 0.71 | 0.77 | — | |
| Applied Materials Inc. | 0.93 | 0.35 | 0.86 | 1.29 | — | |
| Broadcom Inc. | 1.92 | 1.76 | 1.94 | 1.20 | — | |
| Intel Corp. | 0.89 | 0.88 | 1.03 | — | — | |
| KLA Corp. | 0.87 | 0.94 | 1.19 | — | — | |
| Lam Research Corp. | 1.28 | 0.77 | 1.25 | — | — | |
| Marvell Technology Inc. | 0.38 | 0.44 | 0.69 | — | — | |
| Micron Technology Inc. | 2.01 | 1.24 | 1.34 | — | — | |
| NVIDIA Corp. | 2.03 | 4.89 | 2.95 | — | — | |
| Qualcomm Inc. | 1.18 | 0.54 | 1.04 | 1.29 | — | |
| Texas Instruments Inc. | 2.58 | 3.04 | 3.79 | — | — | |
| Cash Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 1.20 | 1.14 | 1.29 | — | — | |
| Cash Ratio, Industry | ||||||
| Information Technology | 0.71 | 0.67 | 0.89 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 2,102,489 ÷ 1,306,158 = 1.61
2 Click competitor name to see calculations.
The liquidity position experienced a period of significant strengthening between 2019 and 2021, followed by a contraction through 2023. While the company maintained a cash ratio above 1.0 throughout the entire period, indicating an ability to cover current liabilities with cash assets, the trend suggests a shift in the liquidity cushion over time.
- Cash Asset Trends
- Total cash assets exhibited volatility over the five-year period. After an initial decline in 2020 to US$ 1,747,068 thousand, assets grew steadily to a peak of US$ 2,577,981 thousand in 2022. By the end of 2023, cash assets decreased to US$ 2,102,489 thousand, representing a reduction of approximately 18.4% from the 2022 peak.
- Current Liability Movements
- A distinct U-shaped trend is observed in current liabilities. Obligations decreased from US$ 1,318,208 thousand in 2019 to a low of US$ 726,878 thousand in 2021. Subsequently, liabilities rose sharply for two consecutive years, ending 2023 at US$ 1,306,158 thousand, nearly returning to 2019 levels.
- Cash Ratio Analysis
- The cash ratio grew from 1.64 in 2019 to a peak of 2.51 in 2021, driven by the simultaneous decrease in current liabilities and a recovery in cash assets. This period represents the highest level of immediate liquidity. However, the ratio declined to 1.61 by December 31, 2023. This late-period contraction resulted from the convergence of decreasing cash reserves and increasing short-term obligations, bringing the liquidity ratio back to a level consistent with the 2019 baseline.
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