Zimmer Biomet Holdings Inc (ZBH)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.91 | 1.36 | 1.29 | 1.66 | 1.61 | 2.11 | 1.96 | 1.89 | 1.88 | 1.98 | 1.81 | 1.69 | 1.41 | 1.81 | 1.83 | 2.39 | 1.99 | 2.27 | 2.18 | 1.69 |
| Quick ratio | 0.82 | 0.57 | 0.51 | 0.66 | 0.65 | 0.79 | 0.76 | 0.73 | 0.75 | 0.80 | 0.69 | 0.63 | 0.54 | 0.79 | 0.84 | 1.01 | 0.88 | 1.02 | 0.82 | 0.92 |
| Cash ratio | 0.21 | 0.16 | 0.12 | 0.14 | 0.15 | 0.14 | 0.14 | 0.14 | 0.16 | 0.25 | 0.17 | 0.16 | 0.14 | 0.31 | 0.36 | 0.35 | 0.31 | 0.43 | 0.33 | 0.64 |
Zimmer Biomet Holdings Inc's liquidity ratios indicate fluctuations in the company's ability to meet its short-term obligations. The current ratio has varied over the years, ranging from a low of 1.29 in June 2024 to a high of 2.39 in March 2021. A current ratio above 1 suggests the company has more current assets than current liabilities, with a higher ratio indicating stronger liquidity. The quick ratio, which excludes inventory from current assets, shows a similar trend, with the lowest value recorded at 0.51 in June 2024 and the highest at 1.02 in September 2020.
The cash ratio, which is the most stringent measure of liquidity, reveals the proportion of current liabilities that can be covered by cash alone. Zimmer Biomet Holdings Inc's cash ratio has remained relatively stable, with values ranging from 0.12 in June 2024 to 0.64 in March 2020. A higher cash ratio indicates a stronger ability to cover short-term liabilities with cash on hand. Overall, while the company's liquidity position has shown some fluctuations, it is essential to monitor these ratios to ensure the company can meet its short-term financial obligations consistently.
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 194.46 | 197.45 | 195.20 | 197.70 | 196.10 | 188.35 | 186.65 | 184.23 | 183.44 | 174.63 | 169.40 | 162.09 | 167.94 | 185.53 | 186.37 | 198.18 | 188.35 | 192.98 | 177.24 | 159.87 |
The cash conversion cycle of Zimmer Biomet Holdings Inc has shown fluctuations over the reporting periods provided. It measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.
From March 31, 2020, to December 31, 2024, the cash conversion cycle ranged from a low of 159.87 days to a high of 197.70 days, indicating some volatility in the company's operational efficiency. Generally, a shorter cash conversion cycle is preferred as it signifies that the company is able to quickly recover its investments and generate cash from its sales.
The cash conversion cycle peaked at 198.18 days on March 31, 2021, but gradually decreased in the subsequent periods, with fluctuations in between. Notably, the cycle increased again towards the end of the period, reaching 194.46 days on December 31, 2024.
Zimmer Biomet Holdings Inc should aim to efficiently manage its inventory, accounts receivable, and accounts payable to reduce the cash conversion cycle, thereby improving its liquidity position and overall financial performance. Monitoring and addressing the factors contributing to the fluctuations in the cycle will be critical for optimizing the company's working capital management.