Dover Corporation (DOV)

Dover Corporation's liquidity ratios have shown some fluctuations over the years.

1. Current Ratio: The trend in the current ratio indicates a slight decrease from 1.51 in 2020 to 1.23 in 2022, followed by an increase to 2.04 in 2024. This ratio measures the company's ability to cover its short-term liabilities with its current assets. A ratio above 1 suggests the company has enough current assets to cover its current liabilities.

2. Quick Ratio: The quick ratio has also experienced fluctuations, dropping from 0.30 in 2020 to 0.14 in 2022 before increasing to 0.84 in 2024. The quick ratio is a more stringent measure of liquidity as it excludes inventory from current assets. A higher quick ratio indicates a better ability to meet short-term obligations.

3. Cash Ratio: The cash ratio mirrors the trend seen in the quick ratio, indicating a decrease from 0.30 in 2020 to 0.14 in 2022, and then a substantial increase to 0.84 in 2024. This ratio measures how well a company can cover its current liabilities with cash and cash equivalents alone.

Overall, while there have been fluctuations in Dover Corporation's liquidity ratios over the years, the substantial increase in the current, quick, and cash ratios in 2024 indicates an improvement in the company's liquidity position. It is important for investors and stakeholders to monitor these ratios to assess the company's ability to meet its short-term obligations effectively.

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Additional liquidity measure

Dover Corporation's cash conversion cycle, a measure of how quickly the company can convert its resources into cash flow, has shown some fluctuations over the past five years. In 2020, the cash conversion cycle stood at 72.47 days, indicating that it took Dover Corporation approximately 72 days to convert its investments in inventory and accounts receivable into cash.

However, the cycle increased to 88.05 days by the end of 2021, indicating a longer period needed to convert resources into cash. This trend continued into 2022, reaching 91.62 days, suggesting potential inefficiencies in managing cash flow.

In 2023, there was a slight improvement as the cash conversion cycle decreased to 83.55 days, but it still remained higher than the 2020 level. By the end of 2024, the cycle increased again to 87.29 days, indicating a longer timeframe for cash conversion compared to the previous year.

Overall, the fluctuations in Dover Corporation's cash conversion cycle over the five-year period highlight potential challenges in managing working capital efficiently and converting investments into cash in a timely manner. It is essential for the company to closely monitor and improve its cash conversion cycle to optimize its cash flow and overall financial performance.