Chemed Corp (CHE)
Liquidity ratios
| Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.38 | 1.38 | 1.85 | 1.78 | 1.91 | 1.61 | 1.33 | 1.11 | 0.93 | 0.92 | 0.67 | 0.71 | 0.66 | 0.76 | 0.70 | 1.01 | 1.20 | 1.10 | 0.82 | 0.59 |
| Quick ratio | 0.62 | 0.62 | 0.90 | 0.85 | 1.11 | 0.85 | 0.58 | 0.53 | 0.20 | 0.25 | 0.03 | 0.03 | 0.06 | 0.11 | 0.10 | 0.71 | 1.05 | 0.84 | 0.61 | 0.06 |
| Cash ratio | 0.62 | 0.62 | 0.90 | 0.85 | 1.11 | 0.85 | 0.58 | 0.53 | 0.20 | 0.25 | 0.03 | 0.03 | 0.06 | 0.11 | 0.10 | 0.71 | 1.05 | 0.84 | 0.61 | 0.06 |
Chemed Corp's liquidity ratios have shown fluctuations over the years. The current ratio, which measures the company's ability to cover short-term liabilities with current assets, improved from 0.59 in June 2020 to a peak of 1.91 in March 2024 before slightly decreasing to 1.38 by December 2024 and March 2025.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, experienced significant variability during the period. It ranged from a low of 0.03 in June 2022 and September 2022 to a high of 1.11 in March 2024, indicating some level of instability in the company's ability to meet short-term obligations without relying on inventory.
The cash ratio, which specifically assesses the firm's ability to cover current liabilities with cash and cash equivalents, mirrored the trends observed in the quick ratio, reaching a high of 1.11 in March 2024. However, it decreased to 0.62 by December 2024 and March 2025.
Overall, the current, quick, and cash ratios demonstrate Chemed Corp's ability to meet short-term obligations has varied over the period, with some improvements but also periods of decline and fluctuation. It would be important for the company to closely monitor these ratios to ensure they maintain adequate liquidity to support their operations and financial stability.
Additional liquidity measure
| Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 1.85 | 1.86 | 2.29 | 2.54 | 2.59 | 2.96 | 3.13 | 2.96 | 2.77 | 2.74 | 2.82 | 2.89 | 2.82 | 2.69 | 2.24 | 1.98 | 1.81 | 1.88 | 1.98 | 1.98 |
The cash conversion cycle of Chemed Corp has shown fluctuations over the period from June 30, 2020, to March 31, 2025. The cash conversion cycle represents the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.
The trend in Chemed Corp's cash conversion cycle indicates variations in the efficiency of its working capital management. A shorter cash conversion cycle is generally favorable as it implies that the company is able to collect cash from customers more quickly, which in turn enhances its liquidity position.
From June 2020 to December 2021, Chemed Corp's cash conversion cycle remained relatively stable, ranging between 1.81 to 2.69 days. However, from March 2022 onwards, the cash conversion cycle started to increase, reaching a peak of 3.13 days on September 30, 2023, before gradually declining.
The increase in the cash conversion cycle could be due to factors such as an increase in inventory holding periods, longer accounts receivable collection times, or delays in settling accounts payable. Conversely, a decrease in the cash conversion cycle indicates improved efficiency in working capital management.
Overall, Chemed Corp should focus on monitoring and managing its cash conversion cycle to ensure optimal utilization of its working capital and maintain a healthy liquidity position.