LivaNova PLC (LIVN)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 2.95 | 2.98 | 0.97 | 2.29 | 1.07 |
| Quick ratio | 1.44 | 1.34 | 0.56 | 1.52 | 0.62 |
| Cash ratio | 0.80 | 0.72 | 0.30 | 0.92 | 0.12 |
The liquidity ratios of LivaNova PLC indicate its ability to meet short-term financial obligations.
1. Current Ratio:
- The current ratio has shown a fluctuating trend over the past five years, ranging from a low of 0.97 in 2021 to a high of 2.98 in 2022.
- A current ratio above 1 indicates that the company has more current assets than current liabilities to cover its short-term obligations.
- LivaNova's current ratio has generally been above 1, with the highest level observed in 2022 at 2.98, indicating a strong ability to meet short-term obligations.
2. Quick Ratio:
- The quick ratio provides a more stringent measure of liquidity by excluding inventory from current assets.
- LivaNova's quick ratio has also varied over the years, with a low of 0.82 in 2021 and a high of 1.69 in 2020.
- A quick ratio above 1 suggests that the company can meet its short-term obligations without relying on inventory sales.
- The company has generally maintained a quick ratio above 1, indicating a good liquidity position.
3. Cash Ratio:
- The cash ratio measures the company's ability to cover its short-term liabilities with cash and cash equivalents alone.
- LivaNova's cash ratio has displayed fluctuation, from a low of 0.25 in 2019 to a high of 0.94 in 2023.
- A cash ratio above 1 indicates that the company holds enough cash to cover its current liabilities.
- LivaNova's cash ratio has generally been below 1, indicating a reliance on sources other than cash to meet short-term obligations.
Overall, LivaNova PLC has shown a generally favorable liquidity position over the past five years, as indicated by the current and quick ratios consistently above 1. However, the cash ratio suggests a lower level of liquidity if only considering cash and cash equivalents. It is important for the company to have a mix of liquid assets to ensure they can meet their short-term obligations comfortably.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 98.02 | 89.89 | 89.92 | 90.30 | 127.32 |
The cash conversion cycle of LivaNova PLC has fluctuated over the past five years. In 2023, the company's cash conversion cycle was 132.06 days, slightly higher compared to the previous year's 129.31 days. This indicates that LivaNova took slightly longer to convert its investments in inventory and other resources back into cash during the year.
Looking further back, in 2021 the cash conversion cycle was 107.28 days, which was a significant improvement from 134.83 days in 2020. This suggests that the company was able to manage its working capital more efficiently in 2021, resulting in a faster cash conversion cycle.
In contrast, the cash conversion cycle was at its highest in 2019 at 175.05 days, indicating that it took LivaNova over 6 months to convert its investments into cash that year. Since then, the company has made progress in managing its cash conversion cycle more effectively.
Overall, while there have been fluctuations in LivaNova's cash conversion cycle over the years, the trend seems to show some improvement in recent years, which could indicate better working capital management practices within the company.