Merit Medical Systems Inc (MMSI)

The liquidity ratios of Merit Medical Systems Inc indicate the company's ability to meet its short-term obligations and manage its cash resources effectively.

1. Current Ratio: The current ratio has ranged between 2.04 to 6.24 over the past few years. This ratio shows that the company has ample current assets to cover its current liabilities. The ratio peaked at 6.24 as of June 30, 2024, indicating strong liquidity. However, the ratio dropped to 2.04 as of December 31, 2021, reflecting a temporary decrease in current assets compared to liabilities during that period.

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. The quick ratio varied from 1.01 to 4.46 during the same period. The ratio saw a significant increase to 4.46 as of June 30, 2024, indicating the company's ability to meet its short-term obligations without relying on selling inventory. However, the ratio decreased to 1.01 as of December 31, 2021, indicating a lower level of liquidity at that point in time.

3. Cash Ratio: The cash ratio measures the company's ability to cover its current liabilities with its cash and cash equivalents. The cash ratio fluctuated between 0.24 to 3.42 over the years. The ratio saw a sharp increase to 3.42 as of June 30, 2024, suggesting a strong ability to cover short-term obligations with cash on hand. Conversely, the ratio dropped to 0.24 as of September 30, 2020, indicating lower cash reserves relative to current liabilities during that period.

In conclusion, while Merit Medical Systems Inc generally maintains healthy liquidity levels with current, quick, and cash ratios consistently above 1, there have been fluctuations in these ratios over the years, reflecting changing levels of liquidity and short-term financial health. It is important for the company to monitor and manage its liquidity position effectively to ensure it can meet its financial obligations as they become due.

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Additional liquidity measure

The cash conversion cycle of Merit Medical Systems Inc has shown fluctuations over the past few years. It measures the average number of days it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

From March 31, 2020, to December 31, 2024, the cash conversion cycle ranged from a low of 108.90 days in June 2021 to a high of 141.27 days in September 30, 2023. The cycle trended relatively stable in 2020 and 2021 with a slight decrease before increasing in the subsequent years.

A decreasing cash conversion cycle generally indicates better liquidity and operational efficiency since the company is able to convert its resources into cash more quickly. Conversely, an increasing cycle may suggest problems with inventory management, sales collection processes, or inefficiencies in working capital management.

Overall, Merit Medical Systems Inc should focus on monitoring and managing its cash conversion cycle effectively to optimize its working capital, maintain liquidity, and improve overall financial performance.