Enersys (ENS)

Enersys has demonstrated consistent liquidity strength over the past five years based on its liquidity ratios. The current ratio has remained healthy, starting at 2.50 in March 2021, increasing to 2.70 by March 2022, then fluctuating slightly between 2.46 and 2.70 over the subsequent years. This indicates that Enersys has more than enough current assets to cover its short-term liabilities, providing a cushion against potential financial challenges.

In terms of quick ratio, the company has maintained a level of liquidity to meet its short-term obligations without relying on inventory. The quick ratio decreased slightly from 1.64 in March 2021 to 1.21 by March 2025, which may suggest a decrease in the proportion of highly liquid assets relative to current liabilities. However, the quick ratio generally remained above 1, indicating Enersys's ability to cover immediate liabilities without relying on slow-moving inventory.

Furthermore, Enersys's cash ratio, which measures the ability to cover current liabilities using only cash and cash equivalents, remained at a relatively stable level over the five-year period. Starting at 0.67 in March 2021 and declining slightly to 0.44 by March 2025, the cash ratio suggests that Enersys may have reduced its cash reserves compared to current liabilities. However, the cash ratio above 0.4 indicates the company still holds sufficient cash to cover a significant portion of its short-term obligations.

Overall, the liquidity ratios analysis shows that Enersys has maintained a strong liquidity position, with adequate coverage of its short-term liabilities, both in terms of current assets and more liquid assets. However, the slight fluctuations in these ratios over the years indicate the need for continued monitoring to ensure the company's ability to meet its financial obligations in the future.

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Additional liquidity measure

The cash conversion cycle of Enersys, a measure of how efficiently the company manages its working capital, has shown some fluctuations over the past five years.

On March 31, 2021, the cash conversion cycle was 112.70 days, indicating that on average it took Enersys around 112 days to convert its invested resources into cash. Over the following years, there were some variations in this metric: by March 31, 2022, the cycle had increased to 131.71 days, possibly suggesting a delay in the conversion process. However, Enersys managed to improve this efficiency in the subsequent year, as by March 31, 2023, the cycle decreased to 121.59 days.

The trend continued to be somewhat volatile, with the cash conversion cycle dropping to 105.63 days by March 31, 2024, implying a quicker conversion of resources into cash. Finally, by March 31, 2025, the cycle had slightly increased to 108.65 days, still showing a relatively efficient conversion process.

Overall, Enersys has shown some variations in its cash conversion cycle over the past five years, but generally, the trend indicates a relatively efficient management of working capital, with some improvements in certain years leading to faster conversion of resources into cash.