ESAB Corp (ESAB)

ESAB Corp's liquidity ratios indicate the company's ability to meet its short-term financial obligations.

1. Current Ratio: ESAB Corp's current ratio has been relatively stable over the past five years, ranging from 1.61 to 1.82. This ratio suggests that the company has sufficient current assets to cover its current liabilities. A current ratio above 1 indicates that ESAB Corp can easily meet its short-term obligations.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. ESAB Corp's quick ratio has shown fluctuations over the years, with values ranging from 0.07 to 0.39. A quick ratio below 1 indicates that the company may have difficulty meeting its short-term liabilities without relying on inventory sales.

3. Cash Ratio: The cash ratio is the most conservative liquidity measure as it only considers cash and cash equivalents as current assets. ESAB Corp's cash ratio has followed a similar trend to the quick ratio, indicating the company's ability to cover its current liabilities with cash on hand. The cash ratio values also ranged from 0.07 to 0.39 over the five-year period.

Overall, ESAB Corp's liquidity ratios suggest that the company has maintained a relatively stable liquidity position, with the current ratio indicating a healthier liquidity position compared to the quick and cash ratios. Further analysis of cash flow trends and working capital management may provide additional insights into the company's liquidity position in the future.

---

Additional liquidity measure

ESAB Corp's cash conversion cycle has shown fluctuations over the years based on the provided data. As of December 31, 2020, the company's cash conversion cycle was 90.24 days, indicating the time it takes for ESAB Corp to convert its investments in inventory and accounts receivable into cash.

Subsequently, by December 31, 2021, the cash conversion cycle had increased to 96.42 days, suggesting a potential delay in the company's ability to convert its operating inputs into cash flows. However, by December 31, 2022, ESAB Corp managed to improve its cash conversion cycle to 89.08 days, indicating a more efficient management of inventory and receivables.

Furthermore, by the end of December 31, 2023, ESAB Corp's cash conversion cycle decreased further to 81.52 days, signaling a quicker turnaround in converting its resources into cash. Lastly, as of December 31, 2024, the cycle increased slightly to 86.51 days, which may indicate that ESAB Corp experienced a minor delay in its cash conversion process compared to the previous year.

Overall, ESAB Corp's cash conversion cycle has shown variations, with some improvements and slight setbacks over the years, reflecting the company's management of inventory, accounts receivable, and accounts payable in generating cash flows. Monitoring and managing this cycle effectively is crucial for ESAB Corp to optimize its working capital and ensure a healthy cash flow position.