Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
ON Semiconductor Corp., liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Current ratio | 2.71 | 2.78 | 2.45 | 1.90 | 1.66 | |
| Quick ratio | 1.57 | 1.82 | 1.40 | 1.05 | 0.88 | |
| Cash ratio | 1.14 | 1.42 | 0.88 | 0.65 | 0.49 |
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 company demonstrated a significant strengthening of its liquidity position between 2019 and 2022, followed by a slight moderation in 2023. All three liquidity metrics exhibit a consistent upward trajectory during the initial four years of the period, suggesting a substantial accumulation of short-term assets or a strategic reduction in current liabilities.
- Current Ratio
- The current ratio increased steadily from 1.66 in 2019 to a peak of 2.78 in 2022, before settling at 2.71 in 2023. This progression indicates a robust capacity to cover short-term obligations with current assets, with the margin of safety expanding considerably over the five-year period.
- Quick Ratio
- An upward trend is observed in the quick ratio, which rose from 0.88 in 2019 to 1.82 in 2022, ending at 1.57 in 2023. The ratio surpassed the 1.0 threshold in 2020, signaling a shift where the company can meet its immediate financial obligations without relying on the liquidation of inventory.
- Cash Ratio
- The cash ratio exhibited the most pronounced growth, ascending from 0.49 in 2019 to a peak of 1.42 in 2022, before declining to 1.14 in 2023. The 2022 peak indicates a period where cash and cash equivalents alone were sufficient to cover all current liabilities, reflecting a highly conservative liquidity posture.
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Current Ratio
ON Semiconductor Corp., 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 | 5,912,300) | 5,729,400) | 3,781,600) | 3,184,100) | 3,020,000) | |
| Current liabilities | 2,183,600) | 2,061,400) | 1,543,400) | 1,674,500) | 1,818,400) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 2.71 | 2.78 | 2.45 | 1.90 | 1.66 | |
| 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
= 5,912,300 ÷ 2,183,600 = 2.71
2 Click competitor name to see calculations.
The liquidity position of the organization demonstrated a consistent and significant strengthening between 2019 and 2023. A sustained increase in the margin between short-term assets and obligations indicates an enhanced capacity to meet immediate financial commitments.
- Current Assets Trend
- Current assets exhibited a strong upward trajectory throughout the period, increasing from 3.02 billion USD in 2019 to 5.91 billion USD by the end of 2023. The most substantial growth occurred between 2021 and 2022, where assets expanded from 3.78 billion USD to 5.73 billion USD, representing a significant accumulation of liquid resources.
- Current Liabilities Trend
- Current liabilities experienced a period of contraction from 2019 to 2021, falling from 1.82 billion USD to 1.54 billion USD. However, a reversal occurred in 2022 and 2023, with liabilities rising to 2.06 billion USD and 2.18 billion USD, respectively. Despite this later increase, the growth in liabilities remained well below the rate of asset accumulation.
- Current Ratio Analysis
- The current ratio rose steadily from 1.66 in 2019 to a peak of 2.78 in 2022, before concluding the period at 2.71 in 2023. This progression signifies a substantial improvement in short-term solvency. The shift from a ratio of 1.66 to 2.71 indicates that the organization has transitioned to a highly conservative liquidity stance, maintaining significantly more current assets than are required to cover its current liabilities.
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Quick Ratio
ON Semiconductor Corp., 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 | 2,483,000) | 2,919,000) | 1,352,600) | 1,080,700) | 894,200) | |
| Receivables, net | 935,400) | 842,300) | 809,400) | 676,000) | 705,000) | |
| Total quick assets | 3,418,400) | 3,761,300) | 2,162,000) | 1,756,700) | 1,599,200) | |
| Current liabilities | 2,183,600) | 2,061,400) | 1,543,400) | 1,674,500) | 1,818,400) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 1.57 | 1.82 | 1.40 | 1.05 | 0.88 | |
| 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
= 3,418,400 ÷ 2,183,600 = 1.57
2 Click competitor name to see calculations.
The liquidity position of the entity demonstrated a significant strengthening trend from 2019 through 2022, followed by a moderate correction in 2023. The overall progression indicates a transition from a position where quick assets were insufficient to cover current liabilities to a state of substantial liquidity surplus.
- Quick Asset Trajectory
- Total quick assets experienced consistent growth over the first four years of the period, rising from US$ 1,599,200 thousand in 2019 to a peak of US$ 3,761,300 thousand in 2022. This represents a substantial accumulation of highly liquid resources. A slight reduction was observed in 2023, with assets decreasing to US$ 3,418,400 thousand.
- Current Liabilities Trend
- Current liabilities showed a declining trend between 2019 and 2021, reaching a low of US$ 1,543,400 thousand. However, this trend reversed in 2022, with liabilities increasing to US$ 2,061,400 thousand and continuing to climb to US$ 2,183,600 thousand by the end of 2023.
- Quick Ratio Analysis
- The quick ratio improved steadily from 0.88 in 2019 to a peak of 1.82 in 2022, reflecting a period of aggressive liquidity enhancement. While the ratio declined to 1.57 in 2023 due to the simultaneous decrease in quick assets and increase in current liabilities, the figure remains well above the 1.0 threshold, indicating a robust capacity to meet short-term obligations without relying on inventory liquidation.
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Cash Ratio
ON Semiconductor Corp., 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 | 2,483,000) | 2,919,000) | 1,352,600) | 1,080,700) | 894,200) | |
| Total cash assets | 2,483,000) | 2,919,000) | 1,352,600) | 1,080,700) | 894,200) | |
| Current liabilities | 2,183,600) | 2,061,400) | 1,543,400) | 1,674,500) | 1,818,400) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 1.14 | 1.42 | 0.88 | 0.65 | 0.49 | |
| 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
= 2,483,000 ÷ 2,183,600 = 1.14
2 Click competitor name to see calculations.
The analysis of the cash ratio from 2019 to 2023 reveals a period of significant liquidity expansion followed by a moderate contraction in the final year.
- Cash Ratio Trend
- A consistent upward trajectory is observed between 2019 and 2022, with the ratio increasing from 0.49 to 1.42. This trend indicates a substantial improvement in the capacity to meet short-term obligations using only the most liquid assets. The peak in 2022 signifies a position where cash assets exceeded current liabilities by 42%.
- Total Cash Assets Dynamics
- Total cash assets grew steadily from US$ 894.2 million in 2019 to US$ 1.35 billion in 2021, before experiencing a sharp increase to US$ 2.92 billion in 2022. A subsequent decline to US$ 2.48 billion occurred in 2023, which directly contributed to the reduction of the overall cash ratio.
- Current Liabilities Performance
- Current liabilities exhibited a downward trend from 2019 to 2021, decreasing from US$ 1.82 billion to US$ 1.54 billion. However, a reversal occurred in 2022 and 2023, with liabilities rising to US$ 2.06 billion and US$ 2.18 billion, respectively.
- Liquidity Position Assessment
- The transition of the cash ratio from below 1.0 to above 1.0 between 2021 and 2022 marks a shift in the liquidity profile. Despite the decline to 1.14 in 2023, the liquidity position remains robust, as cash assets continue to exceed the total value of current liabilities.
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