Adtalem Global Education Inc (ATGE)

The liquidity ratios of Adtalem Global Education Inc. display a clear trend of deterioration over the period from June 30, 2021, through June 30, 2025.

The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, decreased significantly from 3.71 in 2021 to 1.31 in 2022, and further declined to 1.11 in 2023. The downward trajectory continued with ratios of 0.86 in 2024 and 0.82 projected for 2025. This suggests a diminishing capacity to cover short-term liabilities solely with current assets, approaching a marginal level nearing 1.0, which indicates that current liabilities may soon surpass current assets if the trend persists.

Similarly, the quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has also shown a marked decline. From 1.32 in 2021, the quick ratio dropped to 1.05 in 2022, then decreased further to 0.90 in 2023. The forecasted ratios for 2024 and 2025 are 0.74 and 0.71, respectively. These values reinforce the observation that the company's ability to quickly meet its short-term obligations without relying on inventory or other less liquid assets is weakening.

The cash ratio, which is the most conservative liquidity measure indicating the company's ability to cover short-term liabilities solely with cash and cash equivalents, similarly declined from 1.22 in 2021 to 0.86 in 2022. It continued to decrease to 0.66 in 2023 and is projected to fall further to 0.48 in 2024 and 0.42 in 2025. This trend indicates that the company's readily available cash resources are shrinking relative to its short-term liabilities. A cash ratio below 0.5 signals a relatively low level of liquidity, which implies increased financial risk if adverse conditions prevail.

Collectively, these ratios reflect a consistent decline in liquidity over the analyzed period. The steady deterioration across all three measures suggests a weakening ability of Adtalem Global Education Inc. to cover its short-term obligations through liquid assets. This trend emphasizes the importance for the company to address liquidity management to prevent potential liquidity crises and to ensure operational flexibility in the face of changing financial conditions.

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Additional liquidity measure

The cash conversion cycle (CCC) of Adtalem Global Education Inc over the specified period demonstrates a consistent negative value, reflecting a pattern of effective working capital management and quick cash conversion from operations. As of June 30, 2021, the CCC was recorded at -14.18 days, indicating the company was able to generate cash before paying its suppliers and other operating expenses. Over the subsequent years, the CCC became more negative, reaching -10.13 days in June 2022, and further extending to -19.42 days by June 30, 2023. The most recent data for June 30, 2024, shows a CCC of -24.41 days, and as of June 30, 2025, it slightly decreased to -23.44 days.

This trend of increasingly negative cash conversion cycle figures suggests a pattern of improving cash flow efficiency. The extension into more negative territory indicates the company is able to collect receivables and manage payables more effectively, allowing it to generate cash ahead of completing payments to suppliers. Such a pattern reflects operational efficiencies, possibly through faster receivables collection, longer payable periods, or both.

The slight reduction in the negativity of the CCC from -24.41 days in 2024 to -23.44 days in 2025 may imply a marginal adjustment in operational strategies or working capital management. Overall, the data portrays a stable and improving liquidity profile, with Adtalem maintaining a cash conversion cycle that enables it to fund its operations with a significant cash cushion before disbursing working capital obligations.