Enpro Industries (NPO)

Enpro Industries has shown varying levels of liquidity ratios over the past few years.

The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, has fluctuated between 1.77 and 4.03. Generally, a current ratio above 2 is considered healthy, indicating that the company has more than enough current assets to cover its short-term obligations. Enpro Industries has mostly maintained a current ratio above 2, with some fluctuations notably in the last two quarters of 2021 and the first two quarters of 2022 when the ratio dropped below 2. However, the ratio has improved in the recent quarters, reaching 3.31 by December 31, 2023. The highest current ratio was recorded on June 30, 2023, at 4.03, indicating strong short-term liquidity at that point.

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 has ranged from 0.66 to 2.20. A quick ratio above 1 suggests that the company can meet its short-term obligations without relying on selling inventory, which is generally a positive sign. The quick ratio for Enpro Industries has generally been above 1, indicating a strong ability to cover short-term liabilities. However, there were occasional dips below 1, especially at the end of 2021 and the first half of 2022, which may suggest a slight liquidity strain during those periods. The highest quick ratio was recorded on June 30, 2023, at 2.20, indicating a very strong liquidity position at that time.

The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover its current liabilities with cash and cash equivalents alone. Enpro Industries' cash ratio has ranged from 0.66 to 2.20. A cash ratio above 1 implies that the company can pay off all its current liabilities with cash only, which is a very strong position. Enpro Industries has generally maintained a cash ratio above 1, indicating a solid cash position relative to its short-term obligations. However, there were periods, particularly towards the end of 2021 and in the first half of 2022, where the cash ratio fell below 1, suggesting a potential need to improve its cash position during those times. The highest cash ratio was recorded on June 30, 2023, at 2.20, reflecting a significant cash surplus compared to short-term liabilities.

Overall, Enpro Industries has shown reasonable liquidity ratios over the years, with occasional dips below ideal levels. It is essential for the company to monitor and manage its liquidity effectively to ensure it can meet its short-term obligations and maintain financial stability.

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Additional liquidity measure

The cash conversion cycle of Enpro Industries has shown fluctuations over the years based on the data provided. The cash conversion cycle indicates how long it takes for a company to convert its resources into cash flow.

From March 31, 2020, to June 30, 2024, the cash conversion cycle trended upwards initially, peaking at 86.79 days on June 30, 2024. This suggests that the company took longer to convert its investments in inventory into cash receipts from sales during this period.

On average, Enpro Industries took around 75 days to convert its resources into cash during this timeframe, with the cycle fluctuating between approximately 62 to 87 days. A longer cash conversion cycle can be an indicator of inefficiencies in managing working capital, such as slow inventory turnover or delayed receivables collection.

It is important for Enpro Industries to closely monitor and improve its cash conversion cycle to enhance its liquidity position and efficiency in utilizing its resources. This can be achieved through better inventory management, tighter credit terms with customers, and streamlining operational processes to expedite the conversion of resources into cash.