Chemed Corp (CHE)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.61 | 0.92 | 0.76 | 1.10 | 0.73 |
| Quick ratio | 1.43 | 0.72 | 0.56 | 1.26 | 0.57 |
| Cash ratio | 0.85 | 0.25 | 0.11 | 0.84 | 0.02 |
The current ratio of Chemed Corp. has shown some improvement over the years, reaching 1.61 in 2023 from 0.73 in 2019. This indicates that the company's ability to cover its short-term obligations with its current assets has improved. The quick ratio has also followed a similar trend, increasing to 1.57 in 2023 from 0.70 in 2019. This indicates that Chemed Corp. has an adequate level of liquidity to cover its short-term liabilities without relying on inventory.
The cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, has increased significantly over the years, reaching 0.98 in 2023 from 0.15 in 2019. This suggests that Chemed Corp. has a stronger ability to meet its short-term obligations solely with its available cash, which is a positive sign for its financial health.
Overall, the liquidity ratios of Chemed Corp. have shown an improving trend over the years, indicating that the company has become more capable of meeting its short-term obligations with its current assets and cash reserves.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 19.11 | 17.20 | 10.26 | 12.25 | 17.32 |
The cash conversion cycle of Chemed Corp. has fluctuated over the past five years. In 2023, the company's cash conversion cycle increased to 16.30 days from 15.41 days in 2022. This suggests that Chemed Corp. took longer to convert its investments in inventory and accounts receivable into cash compared to the previous year.
Compared to 2021 when the cash conversion cycle was 6.64 days, the cycle has increased significantly in 2023. This indicates that the company may be taking longer to sell its inventory and collect payments from customers, resulting in a slower cash conversion process.
In 2020, the cash conversion cycle was 9.78 days, which was lower than in 2023. This suggests that the company was more efficient in managing its working capital and converting it into cash in 2020 compared to the most recent year.
The cash conversion cycle was higher in 2019 at 17.73 days compared to 2023, indicating that the company has improved its efficiency in cash conversion over the years.
Overall, Chemed Corp. may need to focus on improving its inventory management and accounts receivable collection processes to shorten its cash conversion cycle and enhance its overall liquidity position.