Amedisys Inc (AMED)

Amedisys Inc's liquidity ratios have shown improvement over the years.

1. Current Ratio:
- The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has increased steadily from 0.79 in 2020 to 1.23 in 2024.
- This indicates that the company is in a better position to meet its short-term liabilities with its current assets.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets.
- Amedisys's quick ratio has fluctuated but generally improved from 0.18 in 2020 to 0.59 in 2024.
- This suggests that the company has a sufficient level of highly liquid assets to cover its short-term obligations.

3. Cash Ratio:
- The cash ratio, which indicates the company's ability to meet its short-term obligations with cash and cash equivalents, has followed a similar trend to the quick ratio.
- It has increased from 0.18 in 2020 to 0.59 in 2024, showing a stronger cash position relative to its short-term liabilities.

Overall, Amedisys Inc's liquidity ratios have displayed positive trends, with increasing values for the current ratio, quick ratio, and cash ratio over the years. This indicates an improved ability to meet short-term obligations and suggests a stronger liquidity position for the company.

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Additional liquidity measure

Amedisys Inc's cash conversion cycle has shown fluctuations over the years based on the provided data.

As of December 31, 2020, the cash conversion cycle stood at 3.62 days, indicating a relatively efficient management of cash flows, with the company able to convert its investments in inventory and receivables into cash quickly.

By December 31, 2021, the cash conversion cycle increased slightly to 3.97 days, suggesting a minor delay in the conversion of investments into cash compared to the previous year.

However, by December 31, 2022, the cash conversion cycle significantly extended to 7.30 days, signaling a potential challenge in managing working capital efficiently. This increase may have been influenced by changes in inventory turnover, collection period for receivables, or payment period for payables.

Surprisingly, by December 31, 2023, the cash conversion cycle dropped to 0.00 days, which could point to a more effective cash management strategy or a substantial improvement in working capital processes. This sudden decrease may require further investigation to understand the underlying reasons.

Similarly, as of December 31, 2024, the cash conversion cycle remained at 0.00 days, potentially indicating a continuation of the improved cash conversion efficiency seen in the previous year.

Overall, while fluctuations in the cash conversion cycle are normal for businesses, Amedisys Inc should monitor and analyze these changes closely to ensure optimal management of working capital and cash flow operations.