Teleflex Incorporated (TFX)

Teleflex Incorporated's liquidity ratios have exhibited some fluctuations over the years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, decreased from 2.63 in 2020 to 2.10 in 2021, but then improved to 2.43 in 2022 before slightly declining to 2.32 in 2023 and 2.27 in 2024. This indicates that Teleflex has more than enough current assets to cover its short-term liabilities.

On the other hand, the quick ratio, also known as the acid-test ratio, shows a similar declining trend. It dropped from 0.73 in 2020 to 0.69 in 2021, further decreased to 0.59 in 2022, and then dropped more significantly to 0.40 in 2023 before slightly recovering to 0.45 in 2024. This suggests that Teleflex may have difficulty meeting its short-term obligations without relying on inventory sales.

Lastly, the cash ratio, which is the most conservative of the three liquidity ratios, illustrates the company's ability to cover its current liabilities with its cash and cash equivalents. The cash ratio mirrored the trend of the quick ratio, declining from 0.73 in 2020 to 0.69 in 2021, further lowering to 0.59 in 2022, before dropping to 0.40 in 2023, then marginally improving to 0.45 in 2024.

Overall, while Teleflex's current ratio indicates a comfortable liquidity position, the decreasing trends in the quick and cash ratios highlight a potential concern regarding the company's ability to meet short-term obligations without relying on inventory sales or other sources of quick liquidity.

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Additional liquidity measure

The cash conversion cycle of Teleflex Incorporated, a key metric in assessing its efficiency in managing working capital, has fluctuated over the past five years.

As of December 31, 2020, the cash conversion cycle stood at 154.52 days, indicating that on average, it takes Teleflex approximately 154.52 days to convert its investments in inventory into cash from sales.

By December 31, 2021, Teleflex managed to improve its cash conversion cycle to 138.37 days, suggesting a more efficient utilization of its working capital during that year.

However, in the following years, there was an increase in the cash conversion cycle. By December 31, 2022, the cycle extended to 167.59 days, indicating a slowdown in the conversion of inventory to cash.

This trend continued into December 31, 2023, with the cycle further elongating to 172.17 days, signifying potential challenges in managing working capital effectively.

Subsequently, by December 31, 2024, Teleflex was able to reduce the cash conversion cycle to 162.90 days, showing some improvement compared to the previous year.

Overall, Teleflex's cash conversion cycle has experienced fluctuations over the years, with efforts made to shorten the cycle in certain periods but also facing challenges leading to prolonged cycles in others. Further analysis and strategies may be required to enhance working capital efficiency and optimize cash flow management in the future.