Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Teradyne Inc., liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Current ratio | 3.28 | 3.03 | 3.20 | 3.45 | 3.08 | |
| Quick ratio | 1.88 | 1.86 | 2.38 | 2.76 | 2.36 | |
| Cash ratio | 1.24 | 1.20 | 1.70 | 2.05 | 1.69 |
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).
Teradyne Inc. maintains a robust liquidity position, as evidenced by current, quick, and cash ratios that consistently remain well above 1.0 throughout the period from 2019 to 2023. A general peak in liquidity metrics was observed in 2020, followed by a period of contraction that bottomed in 2022, with a modest recovery occurring in 2023.
- Current Ratio
- The current ratio exhibits high stability, fluctuating between a low of 3.03 in 2022 and a peak of 3.45 in 2020. The ratio ended the period at 3.28 in 2023, indicating a consistent and strong ability to meet short-term obligations using current assets.
- Quick Ratio
- A downward trend is observable in the quick ratio after 2020. Following a peak of 2.76, the ratio declined to 1.86 in 2022 and remained nearly stagnant at 1.88 in 2023. The divergence between the current ratio and the quick ratio suggests an increase in the proportion of less liquid current assets, such as inventory, relative to the total asset base.
- Cash Ratio
- The cash ratio mirrors the trajectory of the quick ratio, peaking at 2.05 in 2020 before decreasing to 1.20 in 2022 and recovering slightly to 1.24 in 2023. Despite the decline from the 2020 high, the ratio remains above 1.0, signifying that cash and cash equivalents alone are sufficient to cover all current liabilities.
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Current Ratio
Teradyne 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 | 2,162,035) | 2,257,915) | 2,576,227) | 2,415,434) | 1,658,884) | |
| Current liabilities | 659,951) | 746,263) | 805,120) | 700,871) | 539,029) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 3.28 | 3.03 | 3.20 | 3.45 | 3.08 | |
| 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 | 2.71 | — | |
| 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
= 2,162,035 ÷ 659,951 = 3.28
2 Click competitor name to see calculations.
The liquidity position of the company remains consistently strong over the analyzed five-year period, characterized by a current ratio that consistently exceeds 3.0. This indicates a substantial capacity to cover short-term obligations with available current assets, maintaining a significant margin of safety.
- Asset and Liability Trends
- A period of growth in both current assets and current liabilities is observed between 2019 and 2021. Current assets peaked in 2021 at US$ 2,576,227 thousand, while current liabilities reached their highest point in the same year at US$ 805,120 thousand. This expansion was followed by a contraction phase in 2022 and 2023, with assets decreasing to US$ 2,162,035 thousand and liabilities falling to US$ 659,951 thousand by the end of 2023.
- Current Ratio Analysis
- The current ratio demonstrated relative stability, fluctuating within a narrow range between a low of 3.03 in 2022 and a peak of 3.45 in 2020. The slight decline observed between 2020 and 2022 suggests that current liabilities grew at a slightly faster rate than current assets during that interval, though the overall liquidity level remained high.
- Recent Liquidity Performance
- An upward movement in the current ratio to 3.28 is noted for the period ending December 31, 2023. This increase occurred despite a year-over-year reduction in current assets, indicating that current liabilities were reduced more aggressively than the asset base, thereby improving the overall liquidity ratio.
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Quick Ratio
Teradyne 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 | 757,571) | 854,773) | 1,122,199) | 914,121) | 773,924) | |
| Marketable securities | 62,154) | 39,612) | 244,231) | 522,280) | 137,303) | |
| Accounts receivable, less allowance for credit losses | 422,124) | 491,145) | 550,749) | 497,506) | 362,368) | |
| Total quick assets | 1,241,849) | 1,385,530) | 1,917,179) | 1,933,907) | 1,273,595) | |
| Current liabilities | 659,951) | 746,263) | 805,120) | 700,871) | 539,029) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 1.88 | 1.86 | 2.38 | 2.76 | 2.36 | |
| 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 | 1.82 | — | |
| 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
= 1,241,849 ÷ 659,951 = 1.88
2 Click competitor name to see calculations.
The liquidity position of the company exhibited a period of significant expansion between 2019 and 2021, followed by a contraction and stabilization phase through 2023. Throughout this five-year period, the quick ratio remained consistently above 1.0, indicating a sustained ability to meet short-term obligations without relying on the sale of inventory.
- Total Quick Assets Trend
- A substantial increase in liquid assets was observed between 2019 and 2020, with totals rising from $1,273,595 thousand to a peak of $1,933,907 thousand. Following a period of relative stability in 2021, a downward trend emerged, with quick assets declining to $1,241,849 thousand by December 31, 2023, effectively returning to levels seen at the beginning of the analysis period.
- Current Liabilities Behavior
- Current liabilities showed a steady upward trajectory from 2019 to 2021, peaking at $805,120 thousand. This trend reversed after 2021, with liabilities decreasing over the subsequent two years to end at $659,951 thousand in 2023.
- Quick Ratio Interpretation
- The quick ratio peaked at 2.76 in 2020, reflecting a period of high liquidity and a substantial margin of safety. A downward adjustment occurred between 2021 and 2022, where the ratio fell from 2.38 to 1.86. The ratio stabilized at 1.88 by the end of 2023. Despite the overall decline from the 2020 peak, the final ratio suggests that the company maintains nearly twice the liquid assets necessary to cover its current liabilities.
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Cash Ratio
Teradyne Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 757,571) | 854,773) | 1,122,199) | 914,121) | 773,924) | |
| Marketable securities | 62,154) | 39,612) | 244,231) | 522,280) | 137,303) | |
| Total cash assets | 819,725) | 894,385) | 1,366,430) | 1,436,401) | 911,227) | |
| Current liabilities | 659,951) | 746,263) | 805,120) | 700,871) | 539,029) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 1.24 | 1.20 | 1.70 | 2.05 | 1.69 | |
| 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 | 1.23 | — | |
| 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
= 819,725 ÷ 659,951 = 1.24
2 Click competitor name to see calculations.
The analysis of liquidity from 2019 to 2023 reveals a fluctuating but consistently strong position, characterized by the ability to cover short-term obligations exclusively with cash and cash equivalents.
- Cash Asset Trends
- Total cash assets experienced a significant increase between 2019 and 2020, rising from $911.2 million to a peak of $1.436 billion. Following this peak, a sustained downward trend occurred, with assets declining to $819.7 million by December 31, 2023.
- Current Liabilities Dynamics
- Current liabilities followed a gradual upward trajectory from 2019, starting at $539.0 million and reaching a peak of $805.1 million in 2021. Subsequently, these obligations decreased over the following two years, concluding at $659.9 million in 2023.
- Cash Ratio Interpretation
- The cash ratio peaked at 2.05 in 2020, reflecting a period of exceptionally high immediate liquidity. Although the ratio declined to 1.20 in 2022 and saw a marginal recovery to 1.24 in 2023, the value remained above 1.0 throughout the entire five-year period. This indicates that current liabilities were consistently fully covered by cash assets, eliminating the need to rely on the sale of inventory or the collection of receivables to meet short-term debts.
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