Acadia Healthcare Company Inc (ACHC)

Acadia Healthcare Company Inc's liquidity ratios have shown varying trends over the years. The current ratio, a measure of the company's ability to meet short-term obligations with its current assets, increased from 1.93 in December 2020 to 1.30 in December 2022 before dropping to 0.67 in December 2023 and then recovering slightly to 1.00 in December 2024. This indicates fluctuations in Acadia Healthcare's short-term liquidity position.

The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, also demonstrated fluctuations. It increased from 0.29 in December 2020 to 0.33 in December 2021, then decreased to 0.11 in December 2023, and finally improved to 0.13 in December 2024. These fluctuations suggest potential challenges in meeting short-term obligations without relying on inventory.

The cash ratio, which indicates the proportion of current liabilities that can be covered by cash and cash equivalents, followed a similar trend to the quick ratio. It increased from 0.29 in December 2020 to 0.33 in December 2021, then dropped to 0.11 in December 2023, and improved slightly to 0.13 in December 2024. This implies that Acadia Healthcare's ability to cover its current liabilities with cash has been fluctuating.

Overall, Acadia Healthcare Company Inc's liquidity ratios have shown inconsistency over the years, with fluctuations in the ability to meet short-term obligations using current assets and cash. It is essential for the company to closely monitor its liquidity position and take necessary steps to ensure stability and adequate liquidity levels to meet its short-term financial commitments.

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Additional liquidity measure

The cash conversion cycle of Acadia Healthcare Company Inc has shown a decreasing trend from 1.43 days as of December 31, 2020, to 1.24 days as of December 31, 2022. This indicates that the company has been able to manage its cash effectively, with its ability to convert inventory into cash improving over this period.

However, there was a significant anomaly observed on December 31, 2024, where the cash conversion cycle spiked to 18.31 days. Such a drastic increase in the cash conversion cycle could signify potential issues with managing working capital efficiently, including possibly slower collection of receivables or extended payment terms to suppliers.

It is important for Acadia Healthcare Company Inc to investigate the reasons behind this sudden increase in the cash conversion cycle and take necessary steps to address any inefficiencies in their working capital management to maintain healthy cash flow operations.