ESAB Corp (ESAB)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.82 | 1.92 | 1.86 | 1.65 | 1.61 | 1.69 | 1.73 | 1.68 | 1.64 | 1.62 | 1.62 | 1.61 | 1.62 |
| Quick ratio | 0.39 | 0.40 | 0.35 | 0.12 | 0.16 | 0.14 | 0.12 | 0.13 | 0.12 | 0.10 | 0.08 | 0.09 | 0.07 |
| Cash ratio | 0.39 | 0.40 | 0.35 | 0.12 | 0.16 | 0.14 | 0.12 | 0.13 | 0.12 | 0.10 | 0.08 | 0.09 | 0.07 |
ESAB Corp's liquidity ratios have shown some fluctuations over the reporting periods. The current ratio has generally remained above 1, indicating that the company has more current assets than current liabilities to cover its short-term obligations. The current ratio increased from 1.62 in December 2021 to 1.82 in December 2024, suggesting an improvement in the company's ability to meet its short-term debt obligations.
On the other hand, the quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, has also shown an increasing trend, albeit with fluctuations. The quick ratio increased from 0.07 in December 2021 to 0.39 in December 2024. This indicates that ESAB Corp has become more capable of meeting its short-term obligations with its most liquid assets.
Furthermore, the cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, has also shown a significant increase from 0.07 in December 2021 to 0.39 in December 2024. This suggests that ESAB Corp has strengthened its ability to pay off its short-term debts solely with its cash reserves.
Overall, ESAB Corp's liquidity ratios demonstrate a positive trend, with improvements in the current ratio, quick ratio, and cash ratio over the reporting periods. These ratios indicate that the company has a solid liquidity position to meet its short-term financial commitments and operational needs.
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 85.73 | 88.01 | 88.22 | 83.32 | 80.97 | 88.08 | 93.63 | 95.09 | 89.08 | 97.04 | 103.70 | 102.61 | 96.42 |
ESAB Corp's cash conversion cycle, a key indicator of efficiency in managing working capital, has demonstrated fluctuations over the period under review. The cycle measures the time it takes for the company to convert its investments in inventory and receivables into cash flows from sales.
From December 31, 2021, to December 31, 2024, the company's cash conversion cycle exhibited a decreasing trend overall. Starting at 96.42 days in December 2021, it gradually decreased to 85.73 days by December 2024. This trend suggests that ESAB Corp has been more efficient in managing its working capital and converting it into cash over the years.
It is important to note that a shorter cash conversion cycle indicates that the company is able to collect cash from customers and sell inventory more quickly, which can be favorable for overall liquidity and operational efficiency. However, a very low cycle may also suggest aggressive management that could potentially impact customer relationships or operational flexibility.
Overall, the decreasing trend in ESAB Corp's cash conversion cycle implies improving efficiency in managing working capital and converting it into cash, which may positively impact the company's financial health and liquidity position.