Nordson Corporation (NDSN)

Liquidity ratios

Jan 31, 2024 Oct 31, 2023 Jul 31, 2023 Apr 30, 2023 Jan 31, 2023 Oct 31, 2022 Jul 31, 2022 Apr 30, 2022 Jan 31, 2022 Oct 31, 2021 Jul 31, 2021 Apr 30, 2021 Jan 31, 2021 Oct 31, 2020 Jul 31, 2020 Apr 30, 2020 Jan 31, 2020 Oct 31, 2019 Jul 31, 2019 Apr 30, 2019
Current ratio 2.19 2.11 2.23 1.17 1.43 1.36 1.35 1.47 2.45 2.62 2.49 2.46 2.86 2.81 3.11 3.17 2.71 2.12 2.21 2.16
Quick ratio 1.22 1.25 1.28 0.66 0.81 0.84 0.80 0.86 1.48 1.77 1.64 1.57 1.89 1.87 2.07 2.17 1.71 1.43 1.46 1.43
Cash ratio 0.25 0.23 0.27 0.13 0.15 0.20 0.16 0.17 0.40 0.67 0.41 0.35 0.63 0.57 0.64 0.85 0.34 0.32 0.33 0.33

The liquidity ratios of Nordson Corp. provide insight into its ability to meet short-term financial obligations.

1. Current Ratio: Nordson Corp.'s current ratio has shown fluctuations over the quarters, ranging from a low of 1.17 in Q2 2023 to a high of 2.23 in Q3 2023. The company generally maintains a healthy current ratio above 2, indicating that it has more than enough current assets to cover its current liabilities.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, measures the company's ability to meet short-term obligations with its most liquid assets. Nordson Corp. has seen variations in its quick ratio, from a low of 0.72 in Q2 2023 to a high of 1.39 in Q3 2023. Although the quick ratio is lower than the current ratio, it still suggests the company has an adequate level of liquid assets to cover its current liabilities.

3. Cash Ratio: The cash ratio reflects the company's ability to pay off its current liabilities with its cash and cash equivalents. Nordson Corp.'s cash ratio has ranged from 0.19 in Q2 2023 to 0.40 in Q1 2024. The company keeps a portion of its assets in cash, but the cash ratio indicates that a significant portion of its current liabilities may not be covered by cash alone.

Overall, Nordson Corp.'s liquidity ratios demonstrate a generally healthy liquidity position over the quarters, with the current ratio above 2 in most cases, a fluctuating quick ratio, and a consistently lower cash ratio. It indicates that the company is adequately positioned to meet its short-term financial obligations, although attention may be needed to ensure sufficient cash reserves for liquidity needs.

Additional liquidity measure

Jan 31, 2024 Oct 31, 2023 Jul 31, 2023 Apr 30, 2023 Jan 31, 2023 Oct 31, 2022 Jul 31, 2022 Apr 30, 2022 Jan 31, 2022 Oct 31, 2021 Jul 31, 2021 Apr 30, 2021 Jan 31, 2021 Oct 31, 2020 Jul 31, 2020 Apr 30, 2020 Jan 31, 2020 Oct 31, 2019 Jul 31, 2019 Apr 30, 2019
Cash conversion cycle days 138.46 146.84 137.71 140.02 144.36 129.70 135.86 129.80 123.76 124.09 123.15 120.18 119.62 123.16 135.24 129.16 124.31 130.81 131.12 131.68

The cash conversion cycle of Nordson Corp. has shown some fluctuations over the past few quarters. In Q1 2024, the company's cash conversion cycle was 179.33 days, slightly improving from the prior quarter. This indicates that Nordson is taking less time to convert its investments in inventory and accounts receivable into cash.

Compared to Q4 2023, the cash conversion cycle decreased in Q1 2024, suggesting that the company may be managing its working capital more efficiently. However, the current cycle is still higher than the levels seen in Q3 and Q2 2022. This indicates that Nordson could further optimize its cash conversion cycle by improving inventory turnover and collection of accounts receivable.

Overall, while Nordson Corp. has made some progress in managing its cash conversion cycle, there is room for further improvement to enhance its liquidity and operating efficiency. Tracking this metric over time will be essential to monitor the company's working capital management performance.