Embecta Corp (EMBC)

The liquidity ratios of Embecta Corp indicate its ability to meet short-term obligations and manage its current assets effectively. Looking at the current ratio, we can see that it has been relatively stable over the past several quarters, ranging between 2.04 and 2.20. This suggests that Embecta Corp has a strong ability to cover its short-term liabilities with current assets.

The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, also shows a consistently healthy trend, albeit slightly lower than the current ratio. The quick ratio has ranged between 1.32 and 1.55, indicating that Embecta Corp maintains a sufficient level of liquid assets to cover its immediate obligations without relying on inventory.

The cash ratio, which is the most stringent measure of liquidity as it considers only cash and cash equivalents, also demonstrates a stable and strong liquidity position for Embecta Corp. The cash ratio has ranged between 0.82 and 0.97, showing that the company has a reasonable level of cash reserves relative to its current liabilities.

Overall, based on the liquidity ratios, Embecta Corp appears to have a solid liquidity position, with consistent ratios above industry benchmarks. This suggests that the company is well-equipped to meet its short-term financial obligations and potentially capitalize on any unexpected opportunities that may arise in the near term.

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Additional liquidity measure

The cash conversion cycle of Embecta Corp has displayed fluctuations over the past six quarters. The cycle measures the time it takes for the company to convert its investment in inventory and other resources into cash flows from sales.

In the most recent quarter, ending December 31, 2023, the cash conversion cycle stood at 91.62 days, indicating an increase compared to the previous quarter where it was 64.92 days. This suggests that the company took longer to convert its investments into cash during this period.

Looking back at the trend, we observe that the cycle was highest in the quarter ending June 30, 2023, at 109.35 days, which might have been a period of less efficient cash flow management or slower inventory turnover.

Conversely, the cycle improved in the quarter ending September 30, 2022, at 65.34 days, suggesting more rapid conversion of investments into cash during that period.

Overall, fluctuations in the cash conversion cycle indicate variability in the company's ability to efficiently manage its working capital and convert its assets into cash. Further analysis of the underlying factors influencing these changes would be needed to provide specific recommendations for improvement.