Haemonetics Corporation (HAE)

Haemonetics Corporation's liquidity ratios provide insight into the company's ability to meet its short-term financial obligations.

1. Current Ratio:
- The current ratio indicates the company's ability to pay its short-term liabilities with its short-term assets. Haemonetics' current ratio has fluctuated over the years, starting at a healthy 2.74 in March 2021, dropping to 1.71 in March 2022, then increasing to 3.06 in March 2023, before decreasing to 2.56 in March 2024. The current ratio above 1 suggests the company has more current assets than current liabilities to cover 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. Haemonetics' quick ratio has also varied, with a decreasing trend over the years. It was 1.26 in March 2021, fell to 0.95 in March 2022, improved to 1.85 in March 2023, and then dropped to 1.29 in March 2024. A quick ratio above 1 indicates the company can meet its short-term liabilities without relying on selling inventory.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, focusing solely on the company's ability to cover its short-term liabilities with cash and cash equivalents. Haemonetics' cash ratio has shown fluctuations as well, starting at 0.76 in March 2021, declining to 0.59 in March 2022, then increasing to 1.13 in March 2023, and dropping to 0.60 in March 2024. A cash ratio above 1 indicates the company possesses enough cash to cover its short-term obligations.

In summary, while Haemonetics Corporation's liquidity ratios have shown some variability over the years, they generally indicate that the company has been able to maintain a solid liquidity position to meet its short-term financial obligations. However, the fluctuations in the ratios suggest there may be some changes in the company's liquidity management that warrant further investigation.

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Additional liquidity measure

Haemonetics Corporation's cash conversion cycle has shown a declining trend over the past five years, indicating an improvement in the company's efficiency in managing its working capital. The cycle decreased from 263.79 days as of March 31, 2021, to 234.19 days as of March 31, 2022, further dropping to 184.82 days as of March 31, 2023. This decline suggests that the company has been able to convert its inventory into cash more quickly and efficiently.

However, there was a slight increase in the cash conversion cycle to 201.73 days as of March 31, 2024. This increase may indicate potential challenges in managing working capital during that period. Notably, as of March 31, 2025, the cash conversion cycle dropped significantly to 0.00 days, which could be an anomaly or indication of a change in the company's operational processes or reporting.

Overall, the decreasing trend in the cash conversion cycle reflects Haemonetics Corporation's efforts to enhance its liquidity, optimize inventory turnover, and manage receivables effectively. It is essential for the company to continue monitoring and improving its cash conversion cycle to ensure sustainable and efficient working capital management in the future.