Enersys (ENS)

Enersys' liquidity ratios indicate the company's ability to meet short-term obligations and cover immediate expenses. The current ratio has declined slightly over the past five years, from 2.60 in 2020 to 2.46 in 2024. This ratio suggests that Enersys may have slightly fewer current assets relative to current liabilities in 2024 compared to previous years, but overall, the company still maintains a strong liquidity position.

The quick ratio, which excludes inventory from current assets, has also experienced a decreasing trend over the same period, from 1.57 in 2020 to 1.19 in 2024. Although this ratio is lower than the current ratio, it still indicates that Enersys has an acceptable level of short-term liquidity and should be able to meet its immediate obligations.

The cash ratio, which measures the company's ability to cover current liabilities with its most liquid assets (cash and cash equivalents), has shown a declining trend over the past five years. The ratio decreased from 0.67 in 2021 to 0.46 in 2024, suggesting that Enersys may have relatively less cash on hand compared to its current liabilities. However, it is important to note that the cash ratio is typically lower than the current and quick ratios due to its more stringent criteria for liquid assets.

Overall, Enersys maintains a satisfactory liquidity position based on these ratios, although there has been a slight decrease in liquidity levels over the past five years. It is important for the company to continue monitoring and managing its liquidity to ensure it can effectively meet its short-term financial obligations.

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Additional liquidity measure

The cash conversion cycle of Enersys has exhibited significant variability over the past five years. In March 2024, the company's cash conversion cycle improved to 756.69 days from the previous year's 1,164.22 days, indicating a more efficient management of cash flow and working capital. This improvement suggests that Enersys has been able to convert its resources into cash more quickly, which can be indicative of better inventory management, shorter accounts receivable collection periods, or extended accounts payable payment terms.

The significant reduction in the cash conversion cycle from the extremely high levels seen in 2020 and 2023 is a positive signal for the company's financial health and operational efficiency. However, the cycle remains relatively high compared to the exceptionally low levels observed in 2022, indicating that there may still be room for further optimization in working capital management.

Overall, Enersys' cash conversion cycle has shown fluctuations over the years, with the most recent improvement suggesting a positive trend towards more effective utilization of resources and potentially improved liquidity position. Continued monitoring of the cash conversion cycle will be essential to assess the company's ongoing performance in managing cash flow and working capital effectively.