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).
- Current Ratio
- The current ratio exhibited relative stability over the five-year period. Starting at 3.08 in 2019, it increased to a peak of 3.45 in 2020, indicating enhanced short-term liquidity and ability to cover liabilities with current assets. Subsequently, the ratio declined moderately to 3.2 in 2021 and further to 3.03 in 2022, before rising again to 3.28 in 2023. Overall, the current ratio remained above 3.0 throughout most of the period, reflecting a consistent capacity to meet short-term obligations.
- Quick Ratio
- The quick ratio followed a somewhat fluctuating pattern with a general downward trend after 2020. It started at 2.36 in 2019 and increased significantly to 2.76 in 2020, suggesting improved liquidity without relying on inventory. However, there was a noticeable decline to 2.38 in 2021, followed by a sharper drop to 1.86 in 2022 and a slight recovery to 1.88 in 2023. This indicates a reduction in the most liquid assets relative to current liabilities in the latter years, which might reflect either a shift in asset composition or increased current liabilities.
- Cash Ratio
- The cash ratio showed a decreasing trend after 2020. Initially at 1.69 in 2019, the ratio peaked at 2.05 in 2020, representing a strong cash and cash equivalents position relative to current liabilities. From 2021 onward, the ratio declined to 1.7 in 2021, then further dropped to 1.2 in 2022, and slightly increased to 1.24 in 2023. This trend suggests a reduction in immediate liquidity from cash resources, indicating either increased operational cash usage or changes in cash management policies.
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 | 2.54 | — | |
| Analog Devices Inc. | 1.37 | 2.02 | 1.94 | 1.84 | 1.32 | |
| Applied Materials Inc. | 2.60 | 2.16 | 2.54 | 3.00 | 2.30 | |
| Broadcom Inc. | 2.82 | 2.62 | 2.64 | 1.87 | 1.44 | |
| Intel Corp. | 1.54 | 1.57 | 2.10 | 1.91 | — | |
| KLA Corp. | 2.24 | 2.50 | 2.71 | 2.78 | 2.44 | |
| Lam Research Corp. | 3.16 | 2.69 | 3.30 | 3.43 | 3.61 | |
| Micron Technology Inc. | 4.46 | 2.89 | 3.10 | 2.71 | 2.58 | |
| NVIDIA Corp. | 3.52 | 6.65 | 4.09 | 7.67 | — | |
| Qualcomm Inc. | 2.33 | 1.75 | 1.68 | 2.14 | 1.88 | |
| Texas Instruments Inc. | 4.55 | 4.70 | 5.33 | 4.28 | — | |
| Current Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 2.45 | 2.34 | 2.47 | 2.47 | — | |
| Current Ratio, Industry | ||||||
| Information Technology | 1.41 | 1.37 | 1.55 | 1.71 | — | |
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.
- Current Assets
- The current assets showed a significant increase from 1,658,884 thousand US dollars in 2019 to a peak of 2,576,227 thousand US dollars in 2021. Following this peak, there was a decline to 2,257,915 thousand US dollars in 2022 and a further decrease to 2,162,035 thousand US dollars in 2023. Despite the reduction after 2021, the 2023 figure remains higher than the 2019 level, indicating overall growth in current assets over the five-year period.
- Current Liabilities
- Current liabilities increased from 539,029 thousand US dollars in 2019 to 805,120 thousand US dollars in 2021. After reaching this maximum, liabilities decreased to 746,263 thousand US dollars in 2022 and declined further to 659,951 thousand US dollars in 2023. This pattern reveals initial growth in obligations followed by a consistent reduction in the last two years.
- Current Ratio
- The current ratio, which measures short-term liquidity, improved from 3.08 in 2019 to 3.45 in 2020, reflecting stronger coverage of current liabilities by current assets. It then declined in 2021 to 3.2 and further decreased to 3.03 in 2022, although it rose again to 3.28 in 2023. Overall, the current ratio maintained a stable level above 3.0, indicating a consistently strong liquidity position throughout the analyzed period.
- Summary of Trends
- Overall, the data demonstrates an initial expansion in both assets and liabilities through 2021, followed by a retrenchment in liabilities and a moderate decline in assets in subsequent years. Despite some fluctuations, the company preserved a robust liquidity profile as reflected in the current ratio consistently above 3.0, suggesting effective management of short-term obligations relative to available resources.
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. | 1.67 | 1.57 | 1.49 | 1.81 | — | |
| Analog Devices Inc. | 0.76 | 1.34 | 1.24 | 1.31 | 0.85 | |
| Applied Materials Inc. | 1.63 | 1.17 | 1.64 | 1.95 | 1.38 | |
| Broadcom Inc. | 2.34 | 2.18 | 2.27 | 1.56 | 1.21 | |
| Intel Corp. | 1.01 | 1.01 | 1.38 | 1.24 | — | |
| KLA Corp. | 1.33 | 1.57 | 1.81 | 1.82 | 1.54 | |
| Lam Research Corp. | 1.95 | 1.72 | 2.11 | 2.22 | 2.16 | |
| Micron Technology Inc. | 2.53 | 1.92 | 2.17 | 1.82 | 1.74 | |
| NVIDIA Corp. | 2.61 | 5.96 | 3.56 | 7.04 | — | |
| Qualcomm Inc. | 1.51 | 1.01 | 1.34 | 1.75 | 1.65 | |
| Texas Instruments Inc. | 3.12 | 3.67 | 4.45 | 3.34 | — | |
| Quick Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 1.63 | 1.62 | 1.79 | 1.78 | — | |
| Quick Ratio, Industry | ||||||
| Information Technology | 1.12 | 1.09 | 1.30 | 1.47 | — | |
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.
- Total Quick Assets
-
Total quick assets exhibited an initial increase from 1,273,595 thousand US dollars in 2019 to a peak of 1,933,907 thousand US dollars in 2020. A slight decline followed in 2021, reducing the amount to 1,917,179 thousand US dollars. Notably, from 2021 onward, there was a marked contraction, with total quick assets decreasing significantly to 1,385,530 thousand US dollars in 2022 and further to 1,241,849 thousand US dollars in 2023.
- Current Liabilities
-
Current liabilities demonstrated an upward trend from 539,029 thousand US dollars in 2019 to a peak of 805,120 thousand US dollars in 2021. Subsequently, current liabilities declined in 2022 to 746,263 thousand US dollars and further decreased to 659,951 thousand US dollars in 2023. Overall, the data suggest a gradual reduction in short-term obligations after reaching a high point in 2021.
- Quick Ratio
-
The quick ratio remained strong and well above 1.0 throughout the reported periods, indicating a generally healthy liquidity position. It increased from 2.36 in 2019 to 2.76 in 2020, reflecting improved ability to cover current liabilities with liquid assets. However, after 2020, the quick ratio declined sharply to 2.38 in 2021 and further to 1.86 in 2022. By 2023, the ratio slightly improved to 1.88 but remained below the earlier high levels, suggesting a moderate decrease in short-term liquidity protection compared to the peak in 2020.
- Overall Analysis
-
The period from 2019 to 2020 was characterized by growth in liquid assets and a strengthening liquidity position. From 2021 onwards, both total quick assets and current liabilities showed downward trends, leading to a contraction in the quick ratio. Despite this contraction, the quick ratio stayed above 1.8, indicating that the company maintained a sufficient level of liquid assets relative to current liabilities. The declining trends in quick assets and liabilities after 2021 may reflect strategic adjustments in working capital management or changes in operational dynamics.
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 | 0.95 | — | |
| Analog Devices Inc. | 0.30 | 0.60 | 0.71 | 0.77 | 0.43 | |
| Applied Materials Inc. | 0.93 | 0.35 | 0.86 | 1.29 | 0.81 | |
| Broadcom Inc. | 1.92 | 1.76 | 1.94 | 1.20 | 0.73 | |
| Intel Corp. | 0.89 | 0.88 | 1.03 | 0.97 | — | |
| KLA Corp. | 0.87 | 0.94 | 1.19 | 1.17 | 0.98 | |
| Lam Research Corp. | 1.28 | 0.77 | 1.25 | 1.55 | 1.54 | |
| Micron Technology Inc. | 2.01 | 1.24 | 1.34 | 1.23 | 1.24 | |
| NVIDIA Corp. | 2.03 | 4.89 | 2.95 | 6.11 | — | |
| Qualcomm Inc. | 1.18 | 0.54 | 1.04 | 1.29 | 1.37 | |
| Texas Instruments Inc. | 2.58 | 3.04 | 3.79 | 2.75 | — | |
| Cash Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 1.23 | 1.15 | 1.30 | 1.32 | — | |
| Cash Ratio, Industry | ||||||
| Information Technology | 0.71 | 0.67 | 0.89 | 1.06 | — | |
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.
- Total cash assets
- The total cash assets exhibited an increasing trend from 2019 to 2020, rising substantially from approximately 911 million to 1.44 billion US dollars. This was followed by a slight decline in 2021 to about 1.37 billion US dollars. Subsequently, there was a more pronounced decrease in 2022 and 2023, with cash assets falling to 894 million and 820 million US dollars, respectively. Overall, cash assets peaked in 2020 before trending downward over the subsequent three years.
- Current liabilities
- Current liabilities increased steadily from 539 million US dollars in 2019 to a peak of 805 million in 2021. After 2021, liabilities showed a declining trend, decreasing to approximately 746 million in 2022 and further to 660 million US dollars in 2023. This suggests improved management or reduction of short-term obligations after 2021.
- Cash ratio
- The cash ratio followed a somewhat similar pattern to cash assets. It rose from 1.69 in 2019 to a peak of 2.05 in 2020, indicating strong liquidity at that time. Thereafter, the ratio declined to 1.7 in 2021 and further decreased to around 1.2 in 2022, before a slight increase to 1.24 in 2023. Despite this reduction, the cash ratio remained above 1 throughout the period, indicating that cash assets consistently exceeded current liabilities.
- Summary Insights
- There is a clear peak in liquidity and cash holdings in 2020, with both total cash assets and the cash ratio reaching their highest values. Following this, a decline in cash reserves and liquidity ratios signals a shift towards deploying cash assets or changing operational dynamics. At the same time, current liabilities rose until 2021, then decreased, which may reflect changes in working capital management or strategic initiatives to reduce short-term debt. Despite the declines, the cash ratio's maintenance above 1 suggests the company retained a sound liquidity position across all years analyzed.