Amphenol Corp. (NYSE:APH)

Current Ratio Analysis

The current ratio exhibits moderate fluctuations over the observed periods, beginning at 2.54 in March 2020 and generally maintaining levels above 2.0. A gradual decline is noted from early 2023 onward, decreasing from 2.64 to 2.06 by March 2024. Despite some volatility, the ratio consistently reflects a relatively stable liquidity position, indicating the company's ability to cover short-term liabilities with current assets.

Quick Ratio Analysis

The quick ratio demonstrates more pronounced variability compared to the current ratio. Starting at 1.81 in March 2020, it experiences a downward trend mid-2021, reaching a low near 1.11 in June 2021. There is a partial recovery through late 2021 and early 2023; however, the ratio again declines toward 1.30 by March 2024. This pattern suggests fluctuations in the company's near-cash liquid assets relative to current liabilities, potentially reflecting changes in inventory levels or receivables.

Cash Ratio Analysis

The cash ratio shows a declining trend from a relatively strong position of 1.10 in March 2020 to about 0.41 in June 2021. Thereafter, it stabilizes between approximately 0.47 and 0.62 through to early 2024, ending at 0.57 in March 2024. This suggests that while the company’s liquid cash and cash equivalents relative to current liabilities decreased significantly in 2020-2021, liquidity improved slightly and remained consistent afterward, indicating a cautious but stable cash management approach.

Overall Liquidity Insights

The liquidity ratios together indicate a generally solid short-term financial health, with reasonable coverage of current liabilities by assets. The more substantial declines in the quick and cash ratios compared to the current ratio suggest a reliance on inventory or less liquid current assets to maintain liquidity. The gradual decreases toward early 2024 highlight a trend that may warrant monitoring to ensure continued adequacy of liquid asset positions against obligations.

Current Assets

Over the observed periods, current assets exhibit a moderate upward trend with some fluctuations. Starting at approximately 5.52 billion USD at the beginning of 2020, current assets decreased mid-2020 but subsequently increased, peaking around the end of 2021 at nearly 6.92 billion USD. From 2022 onwards, current assets generally stabilized within a range of 6.3 to 6.8 billion USD, reaching around 7.04 billion USD by the first quarter of 2024, indicating steady growth.

Current Liabilities

Current liabilities also show an overall increasing trend. Beginning around 2.17 billion USD in early 2020, liabilities dropped in the second quarter of 2020 but then steadily rose to about 3.43 billion USD by the first quarter of 2024. While some quarters show slight declines or stabilization, the general direction is upward, particularly notable in the final three quarters of the observed data.

Current Ratio

The current ratio demonstrates relative stability with minor variations, mostly staying above 2.0 throughout the period. The ratio started at 2.54 in early 2020, slightly increasing to around 2.59 in mid-2020, and then fluctuating between about 2.06 and 2.64 in subsequent periods. The ratio’s downward movement towards the end of the timeline, reaching 2.06 in the first quarter of 2024, reflects the rising trend in current liabilities outpacing current assets growth. Despite this, the company maintains a strong liquidity position indicated by a current ratio consistently above 2.0.

Overall Analysis

The company’s liquidity position remains strong with current assets steadily increasing and current liabilities growing at a slower pace. Although the current ratio shows a slight decline in the most recent quarters, it remains at a comfortable level, suggesting the firm’s consistent capacity to cover short-term obligations. The fluctuations in both assets and liabilities may relate to operational or market dynamics, but no abrupt or concerning volatility is noted. The data indicates prudent working capital management sustaining liquidity over the observed timeline.

The analysis of the quarterly financial data reveals several important trends regarding liquidity and balance sheet management.

Total Quick Assets

Total quick assets exhibited variability over the examined periods. Initially, there was a decline from 3,924,100 thousand USD at the end of March 2020 to 2,972,300 thousand USD by June 2020, followed by a recovery and gradual increase reaching 4,291,000 thousand USD in March 2021. After that, the value fluctuated moderately between approximately 3,315,400 thousand USD and 4,065,500 thousand USD during 2021 and 2022, before increasing notably in the last four quarters, culminating at 4,464,900 thousand USD in March 2024. This suggests an overall positive trend in liquid assets, especially in the most recent periods.

Current Liabilities

Current liabilities demonstrated a generally upward trend throughout the period. Starting at 2,170,200 thousand USD in March 2020, liabilities decreased somewhat by the end of 2020, reaching 2,307,300 thousand USD in December 2020. However, from early 2021, current liabilities increased substantially, peaking at 3,423,100 thousand USD by March 2024. This sustained rise indicates increased short-term obligations over time.

Quick Ratio

The quick ratio, representing the coverage of current liabilities by quick assets, started strong at 1.81 in March 2020, then declined through 2020 to 1.51 by September. It partially recovered to a peak of 1.68 in March 2021 but dropped sharply to 1.11 by June 2021. Since then, the ratio fluctuated between 1.22 and 1.61 across subsequent quarters, showing some volatility. Most notably, from mid-2022 onwards, there is a gradual downtrend, with the ratio decreasing from 1.52 in December 2022 to 1.30 in March 2024. Despite remaining above 1, indicating that quick assets still exceed current liabilities, the weakening ratio reflects a relative erosion in liquidity cushion over these recent quarters.

In summary, the company’s liquid asset base has grown over the long term, while current liabilities have increased consistently, leading to a declining quick ratio trend in the latter periods. The liquidity position remains adequate but indicates increasing pressure on short-term financial flexibility.

The analysis of the quarterly financial data reveals several key trends in cash assets, current liabilities, and the cash ratio over the observed periods.

Total Cash Assets

Total cash assets fluctuated notably throughout the timeframe. Initially, there was a sharp decline from 2,383,600 thousand USD at the end of Q1 2020 to 1,314,000 thousand USD by Q2 2020. Following this, the cash holdings experienced moderate recovery and variability, reaching a peak of 2,368,200 thousand USD in Q1 2021. Subsequent quarters showed a general downward trend with modest rebounds, ending at 1,963,500 thousand USD in Q1 2024. This pattern suggests a somewhat volatile liquidity position, potentially reflecting operational or strategic cash management decisions during these quarters.

Current Liabilities

Current liabilities exhibited a largely increasing trend over the period under review. Beginning at 2,170,200 thousand USD in Q1 2020, liabilities initially decreased in Q2 2020, but then increased steadily thereafter. There were noticeable increases in mid-2021 and continuing escalations through 2023, culminating at a peak of 3,423,100 thousand USD in Q1 2024. This rising liability load may indicate increased short-term obligations which could impact working capital and liquidity management.

Cash Ratio

The cash ratio, which measures the company's ability to cover current liabilities with cash or cash equivalents, showed a declining trend overall. Starting above 1.0 in Q1 2020, the ratio fell to a low of 0.41 in Q2 2021, indicating a weakened liquidity position relative to short-term debts during that quarter. Although some recovery is noted thereafter, with the ratio oscillating around 0.5 to 0.6 in the latter quarters, it remains significantly below the initial values. This lower and relatively stable ratio may signal constrained immediate liquidity relative to the company’s current liabilities.

In summary, the data indicates increasing current liabilities against a generally volatile but slightly downward trending cash asset base. This has led to a weakening cash ratio over the period, suggesting a tightening liquidity situation that might require focused cash management and liability control to ensure adequate short-term financial health.