Nordson Corporation (NDSN)

The liquidity ratios of Nordson Corporation have shown varying trends over the past five years, indicating fluctuations in the company's ability to meet its short-term obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has been relatively strong in 2020 and 2021, with ratios of 2.81 and 2.62, respectively. However, there was a significant decline in 2022, with the ratio dropping to 1.36, indicating a potential liquidity strain. The ratio recovered in the following years but remained below the 2020 level.

The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, also reflected a similar trend. The quick ratio was relatively stable in 2020 and 2021 but experienced a significant decline in 2022 to 0.84. The ratio improved in the subsequent years but remained below the levels seen in 2020 and 2021.

The cash ratio, which indicates the company's ability to cover its short-term liabilities with cash and cash equivalents, showed a similar pattern of decline in 2022 followed by a partial recovery in the following years. The 2020 and 2021 ratios were notably higher compared to 2022 and beyond.

Overall, Nordson Corporation's liquidity ratios suggest a generally healthy liquidity position, with the company being able to meet its short-term obligations, although there were fluctuations in recent years that may require further investigation into the company's liquidity management practices.

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Additional liquidity measure

The cash conversion cycle of Nordson Corporation has shown some fluctuations over the past five years. The company's cash conversion cycle increased from 123.45 days in 2020 to 146.89 days in 2023 before decreasing to 146.66 days in 2024. This indicates that Nordson has taken longer to convert its investments in inventory and accounts receivable into cash in 2023 compared to 2020, but has managed to slightly improve its efficiency in 2024.

Overall, the trend suggests that Nordson Corporation may need to focus on managing its inventory and accounts receivable more effectively in order to shorten its cash conversion cycle and improve its cash flow position. The company's ability to efficiently convert its working capital into cash is important for its liquidity and overall financial health.