Merit Medical Systems Inc (MMSI)

Based on the provided data, let's analyze the liquidity ratios of Merit Medical Systems Inc:

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term obligations with its current assets. A higher current ratio is generally favorable as it indicates a stronger ability to meet short-term obligations.
- The trend of Merit Medical Systems Inc's current ratio shows some fluctuation over the years: from 2.32 in 2020, it decreased to 2.04 in 2021, then increased to 2.40 in 2022, significantly jumped to 5.45 in 2023, and decreased slightly to 4.27 in 2024.
- Generally, the current ratio has been above 1, indicating that the company has more than enough current assets to cover its short-term liabilities in most of the years analyzed.

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.
- Merit Medical Systems Inc's quick ratio shows a similar trend to the current ratio, with some fluctuations: from 1.14 in 2020, it decreased to 1.01 in 2021, then increased to 1.07 in 2022, significantly jumped to 3.82 in 2023, and declined to 2.70 in 2024.
- The quick ratio has generally been above 1, indicating that the company can cover its short-term obligations without relying on selling its inventory in most of the years analyzed.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, focusing solely on the company's ability to cover its current liabilities with its cash and cash equivalents.
- Merit Medical Systems Inc's cash ratio has been relatively low compared to its current and quick ratios: from 0.31 in 2020, it decreased to 0.29 in 2021, further decreased to 0.26 in 2022, significantly increased to 2.89 in 2023, and decreased to 1.74 in 2024.
- While the cash ratio has shown some variability, especially the significant increase in 2023, it generally suggests that the company may have a lower ability to cover its short-term obligations with just its cash and cash equivalents alone.

In summary, Merit Medical Systems Inc has demonstrated a consistent ability to meet its short-term obligations over the years assessed, as indicated by its current and quick ratios staying above 1 in most cases. However, the cash ratio reveals a lower level of liquidity when looking solely at cash and cash equivalents. The company should continue monitoring and managing its liquidity position to ensure it can meet its financial commitments effectively.

---

Additional liquidity measure

The cash conversion cycle of Merit Medical Systems Inc has shown a gradual increase over the years, from 115.37 days as of December 31, 2020, to 129.03 days as of December 31, 2024. This indicates that the company is taking longer to convert its investments in inventory and receivables into cash.

A higher cash conversion cycle may suggest inefficiencies in managing working capital, leading to tied-up funds in inventory and accounts receivable. It could also indicate challenges in collecting receivables or managing inventory levels effectively.

A prolonged cash conversion cycle may increase the company's financing costs and reduce its liquidity position. Merit Medical Systems Inc should focus on optimizing its inventory management, enhancing its receivables collection processes, and streamlining its payables to shorten the cash conversion cycle and improve cash flow efficiency.