Envestnet Inc (ENV)

Envestnet Inc.'s liquidity ratios indicate the company's ability to meet its short-term obligations. The current ratio has declined over the past five years, reaching 0.90 at the end of 2023, reflecting a downward trend in the company's ability to cover current liabilities with current assets. The quick ratio also shows a similar trend, standing at 0.90 at the end of 2023, indicating a lower ability to meet short-term obligations without relying on inventory.

The cash ratio, which provides a more stringent measure of liquidity, has fluctuated over the years but has generally decreased to 0.44 at the end of 2023. This implies that Envestnet Inc. may have a lower level of cash and cash equivalents relative to its current liabilities, indicating potential challenges in meeting immediate obligations without relying on other current assets.

Overall, Envestnet Inc.'s liquidity position, as reflected in its current, quick, and cash ratios, shows a declining trend in recent years. This may raise concerns about the company's short-term financial stability and its ability to meet upcoming obligations without facing liquidity constraints. Further analysis of the company's cash management practices and working capital efficiency may be warranted to address these liquidity concerns.

---

Additional liquidity measure

The cash conversion cycle is a key financial metric that indicates how efficiently a company manages its working capital by evaluating the time it takes to convert its investments in inventory and other resources into cash inflows from sales.

Analyzing Envestnet Inc.'s cash conversion cycle over the past five years, we observe a fluctuating trend. In 2019, the company had a relatively low cash conversion cycle of 7.13 days, indicating a quick turnover of its working capital. However, over the following years, the cash conversion cycle increased, reaching its peak at 18.79 days in 2022, suggesting a slower conversion of investments into cash.

By the end of 2023, the cash conversion cycle decreased to 11.87 days, indicating an improvement in working capital efficiency compared to the previous year. Despite the reduction, the cycle remains higher than in 2019, reflecting the company's ongoing efforts to optimize its working capital management.

Overall, Envestnet Inc. should continue monitoring and managing its cash conversion cycle effectively to ensure efficient utilization of resources and timely conversion of investments into cash inflows.