Stryker Corporation (SYK)

Stryker Corp.'s liquidity ratios, including the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown a decreasing trend over the past five years, from 2.58 in 2019 to 1.58 in 2023. This indicates that Stryker Corp. may have become less liquid relative to its current liabilities. A current ratio above 1 is generally considered healthy, although a decreasing trend may warrant further investigation.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Stryker Corp.'s quick ratio has also shown a declining trend over the years, from 1.84 in 2019 to 0.97 in 2023. This declining trend suggests that the company may have a reduced ability to meet its short-term obligations without relying on inventory sales.

The cash ratio, which indicates the company's ability to cover its current liabilities with cash and cash equivalents, has also displayed a downward trend, falling from 1.18 in 2019 to 0.49 in 2023. A decreasing cash ratio may indicate a potential strain on the company's ability to meet its short-term obligations solely with cash resources.

Overall, the trend of declining liquidity ratios for Stryker Corp. raises concerns regarding its short-term financial health and ability to meet its obligations. It is important for investors and stakeholders to closely monitor these ratios and understand the company's liquidity position in the context of its overall financial performance and strategy.

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See also:

Stryker Corporation Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle for Stryker Corp. has shown fluctuations over the past five years. In 2023, the cash conversion cycle increased to 230.21 days from 207.69 days in 2022, indicating that the company took a longer time to convert its investments in inventory into cash. This may suggest potential inefficiencies in managing inventory levels or collecting receivables.

Comparing the data to previous years, there was an improvement in 2022 compared to 2021 when the cycle was 194.36 days. However, in 2020 and 2019, the cycle was significantly higher at 253.75 and 254.36 days, respectively. This indicates that Stryker Corp. has been able to manage its cash conversion cycle more effectively in recent years.

Overall, fluctuations in the cash conversion cycle can be influenced by various factors such as inventory management practices, payment terms with suppliers, and the efficiency of accounts receivable collection. Stryker Corp. may need to continue monitoring and optimizing their working capital management to ensure a more efficient cash conversion cycle in the future.