CONMED Corporation (CNMD)

CONMED Corporation's liquidity ratios show the following trends over the past five years:

1. Current Ratio: The current ratio has fluctuated over the years, ranging from a low of 1.96 in December 31, 2022 to a high of 2.34 in December 31, 2021. This ratio indicates the company's ability to cover its short-term obligations with its current assets. A ratio above 1 implies that the company has more current assets than current liabilities, reflecting a healthy liquidity position. CONMED Corporation's current ratio has generally been above 2, which is considered strong.

2. Quick Ratio: The quick ratio has also fluctuated, with a low of 0.08 in December 31, 2023 to a high of 0.14 in December 31, 2020. This ratio excludes inventory from current assets, providing a more conservative measure of liquidity. A ratio below 1 indicates potential difficulty in meeting short-term obligations without relying on inventory sales. CONMED Corporation's quick ratio has generally been below 0.2, which suggests a lower level of liquidity compared to the current ratio.

3. Cash Ratio: The cash ratio reflects the most conservative measure of liquidity as it considers only cash and cash equivalents to cover current liabilities. CONMED Corporation's cash ratio has remained relatively stable over the years, ranging from 0.08 to 0.14. A cash ratio below 0.1 may indicate potential difficulties in meeting short-term obligations with cash on hand alone. CONMED Corporation's cash ratio has generally been above that threshold, indicating a reasonable level of liquidity in terms of cash availability.

In summary, CONMED Corporation has maintained a relatively strong liquidity position over the past five years, as evidenced by its current ratio consistently above 2. The company's quick ratio and cash ratio also indicate a sufficient level of liquidity to cover short-term obligations, although they are lower than the current ratio. Overall, these liquidity ratios suggest that CONMED Corporation has the ability to meet its short-term financial commitments effectively.

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Additional liquidity measure

The cash conversion cycle of CONMED Corporation has shown a fluctuating trend over the past five years. At the end of 2020, the company had a relatively low cash conversion cycle of 176.86 days, indicating that it took approximately 176.86 days to convert its investments in inventory and accounts receivable into cash.

However, by the end of 2021, the cash conversion cycle had extended to 191.03 days, suggesting that the company took longer to convert its assets into cash compared to the previous year. This increase could indicate potential challenges in managing inventory or collecting receivables efficiently.

In 2022, the cash conversion cycle significantly spiked to 255.78 days, reaching its highest point in the five-year period. Such a prolonged cycle may raise concerns about liquidity and working capital management within the company.

The following year, in 2023, CONMED managed to reduce its cash conversion cycle to 204.38 days, showing some improvement in converting assets into cash more efficiently compared to the previous year. This improvement could be a positive sign of enhanced operational efficiency or better inventory and receivables management.

At the end of 2024, the cash conversion cycle slightly increased to 220.48 days, indicating that the company still took a considerable amount of time to convert its assets into cash, albeit not as high as in 2022. It is crucial for CONMED to continue monitoring and optimizing its cash conversion cycle to ensure effective working capital management and overall financial health.