Enovis Corp (ENOV)

Enovis Corp's liquidity ratios indicate the company's ability to meet its short-term obligations.

The current ratio has shown fluctuations over the years, starting at 1.68 in 2020, increasing to 2.25 in 2021, dropping to 1.41 in 2022, and then rising again to 2.43 in 2023 before slightly decreasing to 2.17 in 2024. Generally, a current ratio above 1 suggests that the company has more current assets than current liabilities to cover its short-term obligations. Enovis Corp's current ratio has generally been above 1 in the recent years, indicating a healthy liquidity position.

The quick ratio, which excludes inventory from current assets, also displays fluctuating trends. Enovis Corp's quick ratio was very low in 2020 at 0.12, improved significantly to 0.70 in 2021, then dropped to 0.04 in 2022 before slight increases in subsequent years. The quick ratio is a more stringent measure of liquidity, as it indicates the company's ability to meet short-term obligations without relying on the sale of inventory. Enovis Corp's quick ratio has shown some instability, particularly in 2022, but has generally been below 1, implying some dependence on selling inventory to meet immediate liabilities.

The cash ratio, which is the most conservative liquidity ratio, mirrors the quick ratio's trends. Enovis Corp's cash ratio was in line with the quick ratio figures, indicating that the company holds minimal cash reserves relative to current liabilities. Similar to the quick ratio, Enovis Corp's cash ratio has been below 1, suggesting a potential need to rely on sources other than cash to meet short-term obligations.

In conclusion, while Enovis Corp has maintained current ratios above 1 in recent years, indicating a generally sufficient level of current assets to cover short-term liabilities, the company's quick and cash ratios suggest a more conservative liquidity position, potentially reliant on inventory and other assets to meet immediate obligations. Monitoring these ratios over time will be crucial to ensure sustainable liquidity management.

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Additional liquidity measure

The cash conversion cycle for Enovis Corp has shown fluctuations over the years, starting at 115.65 days on December 31, 2020, and reaching its peak at 238.86 days on December 31, 2023. This indicates that the company's ability to convert its resources and investments into cash has varied significantly. Such an extended cash conversion cycle may suggest inefficiencies in managing the company's working capital, which could lead to increased financial risk and potential liquidity challenges. It is crucial for Enovis Corp to closely monitor and improve its cash conversion cycle to enhance its overall financial health and stability in the long run.