Enovis Corp (ENOV)

Enovis Corp's liquidity ratios over the past few years show fluctuations in its ability to meet short-term obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, has shown some variability. From March 31, 2020, to December 31, 2021, the current ratio improved steadily from 1.93 to 2.25, indicating a strengthening liquidity position. However, there was a slight decline in the following quarters, settling at 2.17 by December 31, 2024. Overall, the current ratio remained above 1, suggesting that Enovis Corp generally had sufficient current assets to cover its current liabilities.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, showed more volatility. The quick ratio was particularly low at 0.07 on June 30, 2021 and December 31, 2022, indicating possible liquidity challenges during those periods. However, there was a notable improvement to 0.70 by December 31, 2021, which suggests better liquidity strength. The ratio remained relatively stable from March 31, 2023, to December 31, 2024, ranging between 0.07 and 0.12.

The cash ratio, which is the most conservative liquidity measure as it only considers cash and cash equivalents, mirrored the trends seen in the quick ratio. It also exhibited fluctuations, hitting a low of 0.04 on December 31, 2022, but improved to 0.70 by December 31, 2021. Subsequently, the cash ratio remained relatively stable between 0.07 and 0.12 from March 31, 2023, to December 31, 2024.

In conclusion, while Enovis Corp's current ratio indicates a generally healthy liquidity position, the quick and cash ratios show more variability and suggest potential liquidity challenges during certain periods. Management may need to monitor and manage the company's short-term liquidity to ensure it can meet its obligations effectively.

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Additional liquidity measure

The cash conversion cycle of Enovis Corp has fluctuated over the analyzed periods. It started at around 103.98 days on March 31, 2020, and gradually increased to 280.07 days by March 31, 2024, reflecting potential inefficiencies in managing cash flows, inventory, and receivables.

In the first half of the timeline, the cash conversion cycle generally increased, peaking at 135.13 days on September 30, 2021. This could indicate slower collection of receivables, longer inventory holding periods, or delayed payables.

However, from June 30, 2022, to September 30, 2024, there was a significant improvement in the cash conversion cycle, declining to 197.61 days by December 31, 2024. This could suggest more efficient management of working capital elements, leading to a shorter cycle and better cash flow generation.

Overall, Enovis Corp should continue monitoring and optimizing its cash conversion cycle to ensure effective management of cash, inventory, and receivables to support its financial health and operational efficiency.