Enovis Corp (ENOV)

Enovis Corp's liquidity ratios have shown fluctuations over the past eight quarters. The current ratio has improved steadily from Q1 2022 to Q4 2023, indicating the company's ability to meet its short-term obligations with its current assets. The current ratio stood at 2.43 in Q4 2023, which suggests that Enovis Corp has $2.43 in current assets for every $1 in current liabilities.

The quick ratio, which excludes inventory from current assets, also exhibited an upward trend, demonstrating Enovis Corp's improved ability to cover its immediate liabilities with more liquid assets. However, the quick ratio is lower than the current ratio, indicating that Enovis Corp relies on inventory to a certain extent to meet its short-term obligations.

The cash ratio, representing the most stringent liquidity measure, provides insight into the company's ability to cover its current liabilities with its cash and cash equivalents alone. Enovis Corp's cash ratio has fluctuated with a downward trend since Q1 2023, reaching 0.37 in Q4 2023. This suggests that Enovis Corp may have limited reserves of highly liquid assets compared to its current liabilities.

Overall, Enovis Corp's liquidity ratios reflect a generally positive trend in its ability to meet short-term financial obligations, with the current ratio and quick ratio showing improvement over the quarters. However, the declining trend in the cash ratio raises some concerns about the company's potential challenges in maintaining sufficient cash reserves for emergencies or unforeseen circumstances.

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Additional liquidity measure

The cash conversion cycle of Enovis Corp has been fluctuating over the past eight quarters. In Q3 and Q2 of 2023, the company experienced considerably high cash conversion cycles of 552.01 days and 522.12 days respectively, indicating a significant amount of time needed to convert investments in inventory and other resources into cash. This may suggest inefficiencies in managing working capital and operations during these periods.

The Q1 of 2023 also had a comparatively high cash conversion cycle of 494.22 days, signifying a prolonged time span in the conversion process. However, a slight improvement was observed in Q4 of 2023 with a cash conversion cycle of 233.69 days, which could indicate a more efficient management of working capital or operational improvements during that quarter.

In contrast, in Q2 and Q3 of 2022, the company had notably lower cash conversion cycles of 72.86 days and 89.48 days, which suggests that Enovis Corp was able to convert its investments into cash more swiftly during those periods. This may have been a result of effective working capital management strategies or operational efficiencies implemented during those quarters.

Overall, the fluctuating cash conversion cycle of Enovis Corp indicates potential challenges in managing working capital and operational processes effectively, highlighting the importance of continuous monitoring and improvement in these areas to enhance the company's financial performance and liquidity.