Community Healthcare Trust Inc (CHCT)

Community Healthcare Trust Inc's liquidity ratios have fluctuated over the five-year period analyzed.

The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has generally been strong and increasing from 2.17 in 2020 to 2.77 in 2023. This indicates that the company has more than enough current assets to cover its current liabilities.

On the other hand, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has shown some volatility over the years but has generally been below 1, indicating a potential reliance on inventory to meet short-term obligations.

The cash ratio, which is the most conservative liquidity measure as it only considers cash and cash equivalents, has also fluctuated but has remained relatively low, ranging from 0.04 to 0.06. This suggests limited cash resources compared to current liabilities.

Overall, while the current ratio shows a healthy liquidity position for Community Healthcare Trust Inc, the quick and cash ratios indicate that the company may need to carefully manage its liquidity position, especially if quick access to cash is required to meet obligations.

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Additional liquidity measure

Community Healthcare Trust Inc's cash conversion cycle has been gradually increasing over the last five years, indicating some inefficiencies in its working capital management.

The company took approximately 74.80 days to convert its investments in inventory and other resources into cash at the end of 2023, an increase from 67.66 days in 2022. This suggests that the company is taking longer to sell its products or services and collect cash from customers, leading to higher working capital requirements.

Comparing to 2021 and 2020, where the cash conversion cycle stood at 56.75 days and 49.95 days respectively, there has been a noticeable increase in the time it takes for the company to convert its working capital into cash. This could indicate potential issues with inventory management, sales collection, or payment cycles with suppliers.

Although the cash conversion cycle is relatively stable when compared to 2019, which was 49.72 days, the increasing trend over the last three years suggests a need for the company to focus on improving its working capital efficiency to enhance its cash flow and overall financial performance.