Novanta Inc (NOVT)

Liquidity ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 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
Current ratio 2.58 2.79 2.77 2.83 2.98 2.83 3.05 2.84 2.56 2.58 2.01 2.05 2.03 1.88 2.65 2.63 2.66 2.27 2.40 2.19
Quick ratio 1.58 1.64 1.59 1.61 1.76 1.58 1.74 1.57 1.45 1.45 0.51 0.54 1.27 0.54 1.06 0.97 1.75 0.80 0.75 0.54
Cash ratio 0.68 0.59 0.64 0.62 0.75 0.55 0.67 0.58 0.61 0.54 0.51 0.54 0.64 0.54 1.06 0.97 1.09 0.80 0.75 0.54

The current ratio of Novanta Inc has shown fluctuations over the past few years, ranging from a low of 1.88 to a high of 3.05. This ratio indicates the company's ability to cover its short-term liabilities with its current assets. Generally, a current ratio above 1 is considered healthy, with higher ratios suggesting a stronger liquidity position. Novanta's current ratio has mostly remained above 2, indicating a consistent ability to meet its short-term obligations.

The quick ratio, which excludes inventory from current assets, provides a more conservative measure of liquidity. Novanta's quick ratio has also varied significantly, with values ranging from 0.51 to 1.76. A quick ratio above 1 is typically considered favorable, as it suggests the company can meet its short-term obligations without relying on selling inventory. Novanta has generally maintained a quick ratio above 1, indicating a healthy liquidity position.

The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, has shown some stability over the years, with values ranging from 0.51 to 1.09. A higher cash ratio indicates a stronger ability to cover short-term liabilities solely with cash on hand. Novanta's cash ratio has generally been above 0.5, suggesting a reasonable level of liquidity to cover immediate obligations.

Overall, Novanta Inc has demonstrated sound liquidity levels based on its current, quick, and cash ratios over the analyzed periods, indicating the company's ability to meet short-term obligations effectively.

Additional liquidity measure

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 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
Cash conversion cycle days 90.83 107.63 104.59 108.64 106.70 106.50 110.94 111.97 108.06 107.36 43.08 39.99 95.44 37.00 29.17 28.08 83.84 44.02 43.18 44.31

Novanta Inc's cash conversion cycle has shown some fluctuations over the years. The cash conversion cycle represents the time it takes for a company to convert its resource inputs into cash flows from sales. A shorter cash conversion cycle is generally preferred as it indicates more efficient management of working capital.

Novanta Inc's cash conversion cycle ranged from a low of around 28 days to a high of over 110 days during the period from March 31, 2020, to December 31, 2024. The company experienced a significant increase in its cash conversion cycle from around 44 days at the end of 2020 to over 95 days by the end of 2021. This prolonged cycle may suggest difficulties in efficiently managing its working capital, potentially due to issues with collecting receivables or managing inventory.

The company managed to bring down its cash conversion cycle to around 39 days by March 31, 2022, but there were subsequent increases in the cycle duration, peaking at over 110 days by March 31, 2024. This indicates potential challenges in converting resources to cash, which could adversely impact the company's liquidity and overall financial health.

Overall, Novanta Inc's cash conversion cycle analysis highlights the importance of closely monitoring working capital management practices to ensure efficient operations and sustainable business performance.