Avanos Medical Inc (AVNS)

Liquidity ratios

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Current ratio 2.08 3.07 3.16 2.86 3.27 2.90 2.89 2.87 3.07 3.13 2.80 2.90 2.81 3.16 2.94 2.77 2.53 2.51 3.06 2.77
Quick ratio 0.98 1.48 1.46 1.50 1.55 1.62 1.67 1.74 1.79 1.79 1.70 1.74 1.68 2.02 1.83 1.99 1.74 1.71 2.21 2.03
Cash ratio 0.37 0.63 0.51 0.60 0.67 0.72 0.70 0.68 0.85 0.76 0.63 0.65 0.67 1.00 1.05 0.99 0.97 0.98 1.54 1.46

Avanos Medical Inc's liquidity ratios provide insights into its ability to meet short-term obligations and manage its current financial obligations efficiently. The current ratio has shown variability over the quarters, ranging from 2.08 to 3.16, indicating that the company generally has more than enough current assets to cover its current liabilities. The upward trend observed in the current ratio from Q4 2022 to Q2 2023 suggests an improvement in the company's short-term liquidity position.

The quick ratio, which excludes inventory from current assets, has also displayed fluctuation but generally remains above 1, indicating that the company can meet its short-term obligations without relying heavily on inventory liquidation. The decreasing trend in the quick ratio from Q4 2022 to Q1 2023 may raise some concerns about Avanos Medical Inc's ability to maintain its liquidity levels without the inclusion of inventory.

The cash ratio, measuring the company's ability to cover its current liabilities with cash and cash equivalents, has shown a consistent decline from 0.76 in Q4 2022 to 0.50 in Q4 2023. This trend suggests a reduction in the proportion of liquid assets relative to current liabilities, potentially indicating a decreased capacity to settle short-term obligations solely with cash reserves.

Overall, while Avanos Medical Inc's current and quick ratios indicate healthy liquidity positions, the declining trend in the cash ratio raises some concerns about the company's reliance on non-cash assets to meet short-term obligations. Management should closely monitor the liquidity metrics and ensure a balance between current assets and liabilities to sustain financial stability.

Additional liquidity measure

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Cash conversion cycle days 144.51 125.36 113.55 133.58 107.16 132.43 120.73 123.78 116.21 115.36 129.02 139.86 137.29 151.16 124.47 139.34 119.72 107.40 86.85 66.94

The cash conversion cycle of Avanos Medical Inc has fluctuated over the past eight quarters. Starting from Q1 2022, the company's cash conversion cycle was 167.32 days, indicating the average number of days it takes for Avanos to convert its investments in inventory and other resources into cash inflows from sales.

The cycle increased in Q2 and Q3 of 2022 before dropping in Q4 2022. However, the trend changed in Q1 2023, when the cycle spiked to 203.60 days, signifying a potential slowdown in cash inflows relative to the investment in inventory and operations. This trend continued in Q2 and Q3 2023 when it decreased to 157.53 and 184.77 days, respectively.

In Q4 2023, the cash conversion cycle increased to 210.31 days, indicating that the company may be facing challenges in efficiently managing its working capital and turning its assets into cash. It is essential for Avanos to closely monitor and optimize its cash conversion cycle to ensure liquidity and financial stability.