Zimmer Biomet Holdings Inc (ZBH)

Based on the provided data, Zimmer Biomet Holdings Inc's liquidity ratios show fluctuations over the years. The current ratio, a measure of the company's ability to cover its short-term liabilities with its current assets, has been relatively stable ranging from 1.41 to 1.99 over the period from 2020 to 2024. A current ratio above 1 indicates that the company has more current assets than current liabilities, which suggests a healthy liquidity position.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, shows a decreasing trend from 0.54 in 2021 to 0.82 in 2024. This indicates that Zimmer Biomet may have a lower ability to meet its short-term obligations without relying on inventory liquidation. A quick ratio above 1 is generally considered healthy, so Zimmer Biomet's quick ratio indicates a need for monitoring its liquidity position.

The cash ratio, which measures a company's ability to cover its short-term liabilities with its cash and cash equivalents, has also shown fluctuations over the years, ranging from 0.14 to 0.31. The cash ratio provides a more conservative view of liquidity, and Zimmer Biomet's ratios suggest that its cash reserves may be relatively low compared to its short-term liabilities.

In summary, Zimmer Biomet Holdings Inc's liquidity ratios, including the current ratio, quick ratio, and cash ratio, have varied across the years. While the current ratio generally indicates a healthy liquidity position, the decreasing trend in the quick ratio and the relatively low cash ratio may warrant further attention to ensure the company's ability to meet its short-term obligations without facing liquidity challenges.

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Additional liquidity measure

The cash conversion cycle of Zimmer Biomet Holdings Inc has exhibited some fluctuations over the years based on the provided data.

In 2020, the cash conversion cycle was 188.93 days, indicating that, on average, it took the company almost 189 days to convert its investments in inventory and other resources into cash flows from sales.

By the end of 2021, there was a slight improvement in the cash conversion cycle to 167.87 days, suggesting that Zimmer Biomet Holdings Inc managed to streamline its operations and convert its resources into cash more efficiently.

However, in 2022, the cash conversion cycle increased to 183.44 days, showing a slowdown in converting investments into cash. This situation might imply potential difficulties in managing working capital efficiently during this period.

The trend continued into 2023, with the cash conversion cycle expanding to 196.10 days, indicating prolonged cycles in converting investments into cash flows.

By the end of 2024, despite a slight improvement to 194.46 days, the cash conversion cycle remained relatively high compared to previous years, suggesting ongoing challenges in optimizing working capital management.

In conclusion, Zimmer Biomet Holdings Inc's cash conversion cycle has shown variability over the years, with some improvements and setbacks. Continuous monitoring and evaluation of working capital processes may be necessary to enhance efficiency and liquidity management in the future.