ESCO Technologies Inc (ESE)

ESCO Technologies Inc's liquidity ratios have shown varying trends over the past five years:

1. Current Ratio:
- The current ratio has been consistently above 1, indicating that ESCO Technologies Inc has had more current assets than current liabilities to cover its short-term obligations.
- The ratio has been progressively improving over the years, reaching 1.91 in 2024 from 1.74 in 2020. This suggests that the company's ability to meet its short-term obligations has strengthened.

2. Quick Ratio:
- The quick ratio measures the company's ability to meet short-term obligations using its most liquid assets (excluding inventory).
- ESCO Technologies Inc's quick ratio has also exhibited an upward trend over the past five years, improving from 0.77 in 2020 to 0.88 in 2024.
- Although the quick ratio is lower than the current ratio, the increasing trend indicates an enhancement in the company's liquidity position.

3. Cash Ratio:
- The cash ratio measures the company's ability to cover its current liabilities with cash and cash equivalents.
- ESCO Technologies Inc's cash ratio has fluctuated over the years, with a significant increase in 2022 (0.31) followed by a decline in subsequent years.
- The cash ratio of 0.19 in 2024 suggests that the company may have a lower proportion of cash and cash equivalents compared to its current liabilities.

Overall, ESCO Technologies Inc's liquidity ratios indicate an improvement in its ability to meet short-term obligations over the years, with the current and quick ratios showing a positive trend. However, the cash ratio has been more volatile, suggesting fluctuations in the company's cash position relative to its current liabilities.

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Additional liquidity measure

The cash conversion cycle of ESCO Technologies Inc has shown some fluctuations over the past five years. In the latest period ending on September 30, 2024, the cash conversion cycle increased to 151.78 days compared to the previous year, indicating that the company took longer to convert its investments in inventory and receivables into cash.

Looking back at the trend over the past five years, there have been some fluctuations in the cash conversion cycle. In 2023, the cycle decreased to 137.59 days from 128.59 days in 2022, showing an improvement in the company's efficiency in managing its working capital.

However, in 2021, the cash conversion cycle increased to 148.90 days, indicating a temporary slowdown in the conversion of inventory and receivables into cash. This was slightly reversed in 2020 when the cycle decreased to 139.65 days, showing improved efficiency in working capital management compared to the previous year.

Overall, ESCO Technologies Inc should continue monitoring its cash conversion cycle to ensure optimal management of its working capital resources and strive for a more consistent and efficient performance in converting investments into cash.