LivaNova PLC (LIVN)

Liquidity ratios

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Current ratio 2.87 2.95 2.98 0.97 2.29
Quick ratio 1.59 1.44 1.34 0.56 1.52
Cash ratio 1.09 0.80 0.72 0.30 0.92

Based on the provided data, let's analyze the liquidity ratios of LivaNova PLC:

1. Current Ratio:
- December 31, 2020: 2.29
- December 31, 2021: 0.97
- December 31, 2022: 2.98
- December 31, 2023: 2.95
- December 31, 2024: 2.87

The current ratio measures a company's ability to meet its short-term obligations with its current assets. A current ratio above 1 indicates the company has more current assets than current liabilities. LivaNova's current ratio has fluctuated over the years, with a significant decline in 2021 but showing improvement in subsequent years, remaining above 1 in all years, indicating a generally healthy liquidity position.

2. Quick Ratio:
- December 31, 2020: 1.52
- December 31, 2021: 0.56
- December 31, 2022: 1.34
- December 31, 2023: 1.44
- December 31, 2024: 1.59

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. LivaNova's quick ratio also experienced fluctuations, dropping below 1 in 2021 but showing improvement in the subsequent years, indicating the company's ability to cover its short-term obligations without relying on inventory.

3. Cash Ratio:
- December 31, 2020: 0.92
- December 31, 2021: 0.30
- December 31, 2022: 0.72
- December 31, 2023: 0.80
- December 31, 2024: 1.09

The cash ratio is the most stringent liquidity ratio, focusing only on cash and cash equivalents to cover current liabilities. LivaNova's cash ratio showed a similar pattern to the quick ratio, dropping significantly in 2021 but recovering in the following years, surpassing 1 in the most recent year, indicating an enhanced ability to meet short-term obligations with cash on hand.

Overall, LivaNova PLC's liquidity ratios have shown variability over the years but generally demonstrate an improving liquidity position, with the current, quick, and cash ratios trending positively in recent years, reflecting the company's ability to meet its short-term financial obligations effectively.


Additional liquidity measure

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash conversion cycle days 87.89 98.02 89.89 89.92 90.30

The cash conversion cycle of LivaNova PLC has shown a fluctuating trend over the past five years. Starting at 90.30 days in December 2020, the company managed to improve its cash conversion cycle slightly to 89.92 days by the end of December 2021. This trend continued as the cycle decreased further to 89.89 days by December 2022.

However, there was a notable increase in the cash conversion cycle to 98.02 days by December 2023, indicating that the company took longer to convert its investments in inventory into cash during that period. Fortunately, LivaNova PLC was able to reverse this trend and improve its cash conversion cycle to 87.89 days by December 2024, reaching a lower level compared to the previous years.

Overall, understanding and managing the cash conversion cycle effectively is crucial for LivaNova PLC to optimize its working capital and improve cash flow efficiency in the future.