Enpro Industries (NPO)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 2.59 | 3.31 | 3.23 | 1.88 | 2.87 |
| Quick ratio | 1.19 | 1.88 | 1.58 | 0.89 | 1.14 |
| Cash ratio | 1.19 | 1.88 | 1.58 | 0.89 | 1.14 |
Enpro Industries' liquidity ratios provide insight into the company's ability to meet its short-term financial obligations. The current ratio, which measures the company's ability to cover its current liabilities with its current assets, has fluctuated over the years. In 2020, the current ratio was 2.87, indicating a strong liquidity position. However, this ratio decreased to 1.88 in 2021 before rebounding to 3.23 in 2022 and further increasing to 3.31 in 2023. In 2024, the current ratio declined to 2.59 which is still considered acceptable.
The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity as it excludes inventory from current assets. Enpro Industries' quick ratio followed a similar trend to the current ratio, with a significant drop from 1.14 in 2020 to 0.89 in 2021. Subsequently, the quick ratio improved to 1.58 in 2022 and further to 1.88 in 2023 before decreasing slightly to 1.19 in 2024. Overall, the quick ratio indicates a slightly higher level of liquidity compared to the current ratio.
The cash ratio, which is the most stringent liquidity metric as it only considers cash and cash equivalents, mirrors the trend observed in the quick ratio. Enpro Industries' cash ratio was 1.14 in 2020, declined to 0.89 in 2021, then improved to 1.58 in 2022 and 1.88 in 2023. However, in 2024, the cash ratio dropped back down to 1.19.
Overall, Enpro Industries' liquidity ratios show variability over the years, with fluctuations in the company's ability to cover its short-term obligations. While the current ratio and quick ratio have generally been above 1, indicating a healthy liquidity position, the company should carefully monitor its liquidity levels to ensure ongoing financial stability and ability to meet its obligations in the short term.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 83.89 | 82.29 | 82.03 | 82.81 | 72.72 |
The cash conversion cycle of Enpro Industries has shown a trend of increasing over the years, with the cycle lengthening from 72.72 days in 2020 to 83.89 days in 2024. This indicates that the company is taking longer to convert its investments in inventory and other resources back into cash. The rise in the cash conversion cycle may suggest potential inefficiencies in inventory management, accounts receivable collection, or accounts payable payments. Enpro Industries should focus on streamlining its operations and improving working capital management to reduce the cash conversion cycle and enhance its overall liquidity position.