STERIS plc (STE)

STЕRIЅ plc's liquidity ratios have shown some fluctuations over the past few quarters. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has generally been above 2, indicating a healthy liquidity position. However, there was a significant increase in the current ratio in the most recent quarter, reaching 3.08, which may suggest an improved ability to meet short-term obligations.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also been relatively stable and above 1 in most quarters. This indicates that STЕRIЅ plc has a strong ability to meet its short-term liabilities using its most liquid assets. However, the quick ratio dipped slightly in the most recent quarter to 1.28, but then rebounded to 1.31 in the latest quarter.

The cash ratio, which reflects the company's ability to cover its current liabilities with its cash and cash equivalents, has shown more variability compared to the other liquidity ratios. While the cash ratio has generally been on the lower side, it experienced some improvement in the most recent quarter, rising to 0.25. This suggests that STЕRIЅ plc may have increased its cash reserves relative to its current liabilities, enhancing its liquidity position.

Overall, STЕRIЅ plc's liquidity ratios indicate that the company has maintained a solid liquidity position over the past quarters, with improvements noted in some ratios in the most recent period. However, it's essential for the company to continue monitoring and managing its liquidity effectively to ensure it can meet its short-term obligations as they come due.

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Additional liquidity measure

The cash conversion cycle of STERIS plc has shown fluctuations over the past several quarters. The cycle represents the average number of days it takes for the company to convert its investments in inventory and other resources into cash inflows from sales.

Looking at the data provided, we can see that the cash conversion cycle was 121.57 days on March 31, 2024. This indicates that, on average, it takes the company approximately 121.57 days to convert its resources into cash from sales.

Comparing this to previous quarters, we observe variability in the cash conversion cycle. For example, the cycle was longer at 139.65 days on December 31, 2023, but shorter at 115.71 days on March 31, 2023. These fluctuations suggest changes in the company's efficiency in managing its working capital and operations.

Analyzing the trend over time, we notice that the cycle has shown some improvement compared to the higher values seen in 2021, when it exceeded 129 days. The noticeable decrease in the cash conversion cycle during 2022 and 2023 indicates that STERIS plc might have been more effective in managing its working capital, potentially streamlining its operations and improving inventory turnover.

Overall, while the cash conversion cycle of STERIS plc has fluctuated, the recent trend of a decreasing cycle length may suggest enhancements in the company's operational efficiency and working capital management. It is important for the company to continue monitoring and optimizing its cash conversion cycle to ensure effective use of resources and maintain financial health.