Revvity Inc. (RVTY)

Revvity Inc.'s liquidity ratios indicate the company's ability to meet its short-term obligations. The current ratio has been relatively stable over the past five years, ranging from 1.36 to 2.13, with a current ratio of 2.07 as of December 31, 2023. This suggests that the company has improved its liquidity position compared to the prior year. A current ratio higher than 1 indicates that Revvity Inc. has more current assets than current liabilities, which is generally considered favorable.

On the other hand, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has fluctuated significantly over the same period. Notably, the quick ratio was exceptionally low at 0.77 on January 1, 2023, but improved to 1.77 by the end of 2023. This indicates that Revvity Inc. may have reduced its reliance on inventory to meet its short-term obligations.

The cash ratio, representing the most conservative measure of liquidity by focusing solely on cash and cash equivalents, has also shown variability over the five-year period. The cash ratio was highest on January 2, 2022, at 0.65, and increased further to 1.34 by December 31, 2023. This suggests that Revvity Inc. has significantly enhanced its ability to cover its current liabilities with its available cash resources.

Overall, the increasing trend in the current ratio, quick ratio, and cash ratio reflects an improvement in Revvity Inc.'s liquidity position, indicating a strengthened ability to meet its short-term financial obligations and potentially withstand unforeseen financial challenges.

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Additional liquidity measure

The cash conversion cycle of Revvity Inc. has shown some variability over the past five years. As of December 31, 2023, the company's cash conversion cycle stands at 151.48 days, indicating that it takes approximately 151.48 days for the company to convert its investments in inventory and accounts receivable back into cash through sales.

Comparing this to the previous years, we observe fluctuations in the cash conversion cycle. In January 1, 2023, the cycle was shorter at 104.16 days, suggesting a more efficient management of inventory and accounts receivable during that period. However, in January 2, 2022, the cycle increased to 118.10 days, then significantly decreased to 152.31 days in January 3, 2021, before slightly improving to 121.50 days by December 29, 2019.

The increasing trend in the cash conversion cycle from 2021 to 2023 may indicate potential inefficiencies in managing working capital or challenges in converting sales into cash. Conversely, the decrease in the cycle observed in 2022 reflects a more efficient cash conversion process during that year.

Overall, it is important for Revvity Inc. to monitor and manage its cash conversion cycle effectively to ensure optimal working capital management and liquidity. Identifying opportunities to streamline operations, improve inventory turnover, and enhance accounts receivable collection can help the company shorten its cash conversion cycle and strengthen its financial position.