LivaNova PLC (LIVN)
Liquidity ratios
| 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 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 2.95 | 3.23 | 3.27 | 2.86 | 2.98 | 2.96 | 2.93 | 2.63 | 0.97 | 0.98 | 1.15 | 2.34 | 2.29 | 2.39 | 2.51 | 1.16 | 1.07 | 1.17 | 0.95 | 0.87 |
| Quick ratio | 1.44 | 1.43 | 1.42 | 1.24 | 1.34 | 1.40 | 1.08 | 1.01 | 0.56 | 0.58 | 0.75 | 1.59 | 1.41 | 1.60 | 1.67 | 0.66 | 0.62 | 0.68 | 0.50 | 0.48 |
| Cash ratio | 0.80 | 0.79 | 0.77 | 0.68 | 0.72 | 0.80 | 0.41 | 0.42 | 0.30 | 0.30 | 0.49 | 0.98 | 0.82 | 0.92 | 0.98 | 0.24 | 0.12 | 0.16 | 0.07 | 0.08 |
LivaNova PLC's liquidity ratios, namely the current ratio, quick ratio, and cash ratio, indicate the company's ability to meet its short-term financial obligations.
1. Current ratio:
- The current ratio has been consistently above 2 in recent quarters, indicating that the company has more than enough current assets to cover its current liabilities.
- The trend in the current ratio shows a general stability at around the 3 level, suggesting a strong liquidity position throughout the periods analyzed.
- The decreasing trend from Q3 2023 to Q1 2023 may be a cause for caution, as it indicates a slight decline in the company's ability to cover short-term obligations, although the ratios remained above 2.
2. Quick ratio:
- The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity as it excludes inventory from current assets.
- LivaNova PLC's quick ratio has also shown a stable pattern over the quarters, remaining above 1.2, which is considered a healthy level for most industries.
- The company's ability to cover its short-term liabilities with its most liquid assets (excluding inventory) has been consistent and indicates a strong ability to meet immediate obligations.
3. Cash ratio:
- The cash ratio assesses the company's ability to meet short-term liabilities using only its most liquid asset, cash and cash equivalents.
- LivaNova's cash ratio has seen fluctuations but has generally stayed above 0.9, indicating that it has sufficient cash reserves to cover its short-term debt obligations.
- Although the cash ratio is lower than the current and quick ratios, it provides insight into the company's ability to pay off immediate liabilities if needed.
In conclusion, LivaNova PLC's liquidity ratios reflect a strong liquidity position, with the company having ample current assets to cover its short-term liabilities. However, monitoring the trends in these ratios over time is essential to ensure the company's continued ability to meet its financial obligations.
Additional liquidity measure
| 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 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 98.39 | 106.82 | 95.12 | 91.31 | 90.39 | 85.01 | 91.21 | 89.90 | 89.49 | 100.18 | 98.05 | 103.14 | 94.45 | 131.28 | 124.52 | 112.16 | 121.49 | 117.64 | 121.63 | 127.82 |
The cash conversion cycle of LivaNova PLC has shown some fluctuations over the past eight quarters. It indicates the average number of days it takes for the company to convert its investments in inventory and other resources into cash flows from sales.
In Q4 2023, the cash conversion cycle was 132.06 days, indicating that it took the company approximately 132 days to convert its investments in inventory into cash from sales during that quarter. This was a decrease from the previous quarter, Q3 2023, where the cycle was 163.89 days, suggesting an improvement in the company's ability to manage its working capital efficiently.
Looking further back, in Q1 2023 and Q2 2023, the cash conversion cycle was 135.60 days and 143.88 days, respectively. The cycle then decreased in Q4 2022 to 129.31 days, showing a trend of fluctuation in the company's efficiency in managing its cash conversion cycle over the past year.
Comparing the data to the same quarter in the previous year, there seems to be an upward trend in the cash conversion cycle, as it was 111.07 days in Q1 2022 and increased steadily to 132.06 days in Q4 2023.
Overall, LivaNova PLC should continue to monitor and analyze its cash conversion cycle to ensure efficient management of its working capital and streamline its processes to improve cash flows and profitability.