Bruker Corporation (BRKR)

Bruker Corporation's liquidity ratios have shown some fluctuations over the years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has generally been above 1, indicating a healthy liquidity position. However, there has been a slight decrease from 2.63 in 2021 to 1.60 in 2024, which may indicate a potential strain on short-term liquidity.

The quick ratio, a more conservative measure of liquidity that excludes inventory from current assets, also depicts a downward trend from 1.69 in 2021 to 0.61 in 2024. This suggests that Bruker Corporation may have difficulty meeting its current obligations without relying on selling inventory.

Lastly, the cash ratio, which indicates the proportion of current liabilities that can be covered by cash and cash equivalents, has declined significantly from 1.24 in 2021 to 0.14 in 2024. This substantial decrease could indicate a potential liquidity crunch as the company may have limited resources to settle its short-term obligations with cash alone.

In conclusion, while Bruker Corporation has maintained a current ratio above 1, indicating a generally adequate liquidity position, the declining trend in quick ratio and cash ratio raises concerns about the company's ability to meet its short-term financial obligations solely from liquid assets. Investors and analysts should monitor these liquidity ratios closely to assess the company's financial health and ability to manage liquidity risks effectively.

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Additional liquidity measure

Bruker Corporation's cash conversion cycle has shown fluctuations over the past five years. As of December 31, 2020, the company's cash conversion cycle stood at 255.87 days, indicating that it takes approximately 256 days for the company to convert its investments in inventory and other resources into cash from sales.

By December 31, 2021, the cash conversion cycle decreased to 232.91 days, signaling an improvement in the efficiency of Bruker Corporation's working capital management. However, the cycle increased again to 253.42 days by December 31, 2022, suggesting a lengthening of the time it takes the company to generate cash from its operational activities.

Despite this increase, by December 31, 2023, the cash conversion cycle further extended to 258.79 days, reaching its highest level in the five-year period. This trend may indicate potential challenges in inventory turnover or collection of receivables.

However, there was a positive development by December 31, 2024, as the cash conversion cycle decreased to 242.29 days, showing a more efficient management of working capital compared to the previous year. Overall, Bruker Corporation should continue to monitor its cash conversion cycle closely to ensure effective management of its operating cycle and maximize cash flow efficiency.