Enovis Corp (ENOV)

Short-term

Turnover ratios

Enovis Corp's activity ratios provide insights into how efficiently the company is managing its resources and operations.

1. Inventory turnover: Enovis Corp's inventory turnover has been fluctuating over the quarters, ranging from 0.59 to 1.63. A lower turnover ratio may indicate excess inventory levels or slow-moving inventory, while a higher ratio suggests efficient inventory management. Enovis Corp should closely monitor and possibly optimize its inventory levels to ensure smooth operations and avoid unnecessary holding costs.

2. Receivables turnover: The receivables turnover ratio shows how quickly Enovis Corp collects its accounts receivable. The company's turnover has varied between 3.28 and 13.35, with higher numbers indicating a faster collection of receivables. Consistently high turnover is favorable as it reflects effective credit policies and efficient collection processes. Enovis Corp should continue to focus on managing its accounts receivable efficiently to improve cash flow.

3. Payables turnover: Enovis Corp's payables turnover has also been fluctuating, ranging from 1.79 to 12.18. A higher turnover ratio suggests that the company is paying its suppliers quickly, which can be beneficial for negotiating favorable terms. However, an excessively high turnover ratio may indicate difficulties in managing cash flow. Enovis Corp should strike a balance between timely payments to suppliers and optimizing cash flow.

4. Working capital turnover: The working capital turnover ratio indicates how well Enovis Corp is utilizing its working capital to generate revenue. The company's turnover has varied widely from 1.84 to 18.31. A higher turnover ratio suggests efficient utilization of working capital resources to generate sales. Enovis Corp should manage its working capital effectively to ensure sustainable growth and profitability.

In conclusion, Enovis Corp should continue to monitor and optimize its activity ratios to improve operational efficiency, cash flow management, and overall financial performance.

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Average number of days

Enovis Corp's activity ratios indicate the efficiency of its operations in managing inventory, collecting receivables, and paying suppliers.

1. Days of Inventory on Hand (DOH):
- Enovis Corp experienced a significant increase in DOH from Q3 2023 to Q4 2023, indicating a lower turnover of inventory and a potential inefficiency in managing inventory levels during that quarter. This could be a cause for concern as it suggests that inventory is not being sold or used efficiently.
- In contrast, Q3 2022 had the lowest DOH, indicating a more efficient management of inventory during that period. The company was able to sell or use up its inventory quickly compared to other quarters.

2. Days of Sales Outstanding (DSO):
- The DSO ratio represents the average number of days it takes for Enovis Corp to collect payment from its customers. An increase in DSO from Q3 2023 to Q4 2023 indicates potential difficulties in collecting receivables promptly, which could strain the company's cash flow.
- Q2 2022 had the lowest DSO, suggesting efficient management of receivables during that quarter, with Enovis Corp able to collect payments from customers more quickly.

3. Number of Days of Payables:
- The number of days of payables reflects how long Enovis Corp takes to pay its suppliers. An increase in this ratio from Q3 2023 to Q4 2023 indicates that the company took longer to pay its bills during the latter period. This could be a strategic move to manage cash flow but could also strain relationships with suppliers if extended payment terms are not negotiated effectively.
- The highest number of days of payables was seen in Q2 2023, suggesting delayed payments to suppliers during that quarter, which could impact supplier relationships and future credit terms.

Overall, Enovis Corp should closely monitor and manage these activity ratios to ensure efficient operations, effective cash flow management, and favorable relationships with both customers and suppliers.

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Long-term

Enovis Corp's long-term activity ratios provide insight into how efficiently the company is utilizing its fixed assets and total assets to generate sales.

Firstly, the fixed asset turnover ratio has been fluctuating over the quarters, with a significant decline from Q3 2022 to Q3 2023. This ratio indicates that Enovis Corp is generating sales well relative to its investment in fixed assets. A higher ratio is generally more favorable as it signifies that the company is efficiently utilizing its fixed assets to drive revenue. The decrease in the fixed asset turnover ratio in recent quarters may suggest a potential inefficiency in utilizing fixed assets or a decrease in sales generated by these assets.

Secondly, the total asset turnover ratio has also been fluctuating, but the trend is similar to the fixed asset turnover ratio, indicating a decline in the company's overall asset utilization efficiency. A lower total asset turnover ratio suggests that the company may not be effectively utilizing its total assets to generate sales. This could be attributed to various factors such as changes in the company's business model, industry conditions, or operational inefficiencies.

In summary, Enovis Corp's long-term activity ratios suggest a recent decline in asset utilization efficiency, both in terms of fixed assets and total assets. Further investigation into the reasons behind these declines and potential strategies to improve asset efficiency may be warranted to enhance the company's overall operational performance and financial stability.