Addus HomeCare Corporation (ADUS)

Addus HomeCare Corporation's liquidity ratios indicate the company's ability to meet its short-term financial obligations. The current ratio measures the company's ability to pay off its current liabilities with its current assets. The trend over the past five years shows a decline in the current ratio from 3.08 in 2019 to 1.38 in 2023. This suggests a decrease in the company's short-term liquidity position.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, follows the same trend as the current ratio. The quick ratio decreased from 3.08 in 2019 to 1.38 in 2023, indicating a potential decrease in the company's ability to cover its current liabilities without relying on inventory.

The cash ratio, which is the most conservative measure of liquidity, shows a decline from 1.34 in 2019 to 0.58 in 2023. This indicates a decrease in the company's ability to cover its current liabilities solely with cash.

Overall, the declining trend in all three liquidity ratios suggests a potential deterioration in Addus HomeCare Corporation's short-term financial health over the past five years. It may be necessary for the company to further analyze and potentially improve its liquidity management strategies to ensure its ability to meet its financial obligations in the short term.

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Additional liquidity measure

The cash conversion cycle of Addus HomeCare Corporation has exhibited a decreasing trend over the past five years, indicating an improvement in the efficiency of its cash management.

In 2019, the company's cash conversion cycle was relatively long at 70.06 days, suggesting that it took a considerable amount of time for the company to convert its investments in inventory and accounts receivable into cash.

However, there was a significant improvement in 2020 as the cash conversion cycle decreased to 48.13 days, reflecting a more efficient management of working capital. This trend continued in 2021 when the cycle further decreased to 49.79 days.

The most significant improvement was seen in 2022 with a substantial decrease in the cash conversion cycle to 36.04 days, indicating the company's ability to streamline its operations and convert inventory and receivables into cash more quickly.

By the end of 2023, Addus HomeCare Corporation managed to further reduce its cash conversion cycle to 26.53 days, underscoring the company's enhanced efficiency in managing its cash flow and working capital.

Overall, the decreasing trend in the cash conversion cycle reflects positively on the company's operational efficiency and effectiveness in managing its cash resources over the years.