Addus HomeCare Corporation (ADUS)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.67 | 1.38 | 1.70 | 2.76 | 2.00 |
| Quick ratio | 1.42 | 1.24 | 1.57 | 2.66 | 1.93 |
| Cash ratio | 0.63 | 0.45 | 0.61 | 1.44 | 1.01 |
The liquidity ratios of Addus HomeCare Corporation exhibit fluctuations over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with current assets, has shown a general trend of decline from 2.76 in 2021 to 1.67 in 2024, albeit with some fluctuations in between.
Additionally, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also displayed a downward trajectory from 2.66 in 2021 to 1.42 in 2024, indicating a potential decrease in the company's ability to meet its immediate liabilities with its most liquid assets.
Moreover, the cash ratio, which focuses solely on cash and cash equivalents to cover current liabilities, has shown mixed results over the same period, dipping from 1.44 in 2021 to 0.63 in 2024, suggesting a potential decrease in the company's ability to cover its short-term obligations with its cash reserves.
Overall, the declining trend in the liquidity ratios of Addus HomeCare Corporation raises concerns about its short-term financial health and ability to meet upcoming obligations promptly. It is essential for the company to closely monitor its liquidity position and consider strategies to improve its liquidity management in the future.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 29.28 | 30.21 | 39.42 | 52.51 | 51.74 |
The cash conversion cycle for Addus HomeCare Corporation has shown a favorable trend over the years, indicating efficient management of its working capital. From 2020 to 2024, the company's cash conversion cycle has decreased significantly from 51.74 days to 29.28 days. This reduction reflects the company's ability to convert its resources into cash more rapidly.
A shorter cash conversion cycle suggests that Addus HomeCare is collecting cash from its sales more quickly, paying its suppliers at a slower pace, and managing its inventory efficiently. This can lead to improved liquidity and operational efficiency. Overall, the decreasing trend in the cash conversion cycle is a positive indicator of the company's financial health and effective working capital management.