Enerpac Tool Group Corp (EPAC)

Sure, I'd be happy to help with this analysis. Let's start with the current ratio, quick ratio, and cash ratio.

1. Current Ratio:
The current ratio measures the company's ability to pay its short-term obligations using its short-term assets. A higher current ratio indicates a stronger liquidity position. Looking at Enerpac Tool Group Corp's current ratio over the past five years, we can see that it has fluctuated, ranging from 2.24 to 3.23. In 2023, the current ratio stands at 2.40, indicating that the company has $2.40 in current assets for every $1 in current liabilities. The current ratio has generally been above 2.0 over the period, suggesting that Enerpac Tool Group Corp has typically been able to meet its short-term obligations comfortably.

2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Enerpac Tool Group Corp's quick ratio has also fluctuated over the past five years, ranging from 1.22 to 2.58. In 2023, the quick ratio stands at 1.90, indicating that the company has $1.90 in highly liquid assets available to cover each $1 of current liabilities. While the quick ratio is slightly lower than the current ratio, it still suggests a strong ability to meet short-term obligations without relying on inventory sales.

3. Cash Ratio:
The cash ratio is the most conservative liquidity measure, focusing solely on the company's ability to cover short-term liabilities with its cash and cash equivalents. Enerpac Tool Group Corp's cash ratio has also fluctuated over the past five years, ranging from 0.80 to 1.78. In 2023, the cash ratio stands at 1.24, indicating that the company holds $1.24 in cash and cash equivalents for every $1 of current liabilities. This ratio has consistently remained above 1.0, highlighting the company's ability to cover its short-term obligations with its readily available cash.

Overall, based on the liquidity ratios, Enerpac Tool Group Corp appears to have maintained a strong liquidity position over the past five years, with the ability to comfortably meet its short-term obligations using a combination of current assets, highly liquid assets, and cash and cash equivalents. However, the fluctuation in the ratios over the years suggests potential variability in the company's liquidity management, which may warrant further investigation.

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Additional liquidity measure

The cash conversion cycle (CCC) is a key metric that measures the time it takes for a company to convert its investments in inventory and other resources into cash receipts from customers. A lower CCC indicates more efficient management of working capital and faster cash conversion.

Analyzing Enerpac Tool Group Corp's cash conversion cycle over the past five years, we observe fluctuations in the CCC, as follows:

- Aug 31, 2023: 88.82 days
- Aug 31, 2022: 81.51 days
- Aug 31, 2021: 88.39 days
- Aug 31, 2020: 94.14 days
- Aug 31, 2019: 70.45 days

The increasing trend in the CCC between 2019 and 2020, with a decrease in 2022 and again an increase in 2023, indicates varying efficiency in managing the company's working capital and operating cycle.

A high CCC may signify inefficiencies in inventory management, collection of receivables, or elongated payment periods to suppliers. Conversely, a low CCC suggests effective management of inventory, prompt collection of receivables, and/or extended payment terms from suppliers.

It's important to delve deeper into the components of the CCC, such as days sales outstanding (DSO), days inventory outstanding (DIO), and days payable outstanding (DPO), to identify specific areas of improvement.

Overall, the varying CCC values over the years for Enerpac Tool Group Corp indicate fluctuations in working capital management efficiency and warrant further analysis to ascertain the specific operational factors driving these changes.