Chemed Corp (CHE)

Quick ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash	US$ in thousands	263,958	74,126	32,895	162,675	6,158
Short-term investments	US$ in thousands	—	—	—	88,811	—
Receivables	US$ in thousands	181,511	139,408	137,217	126,853	143,827
Total current liabilities	US$ in thousands	312,050	297,205	302,399	299,108	262,220
Quick ratio		1.43	0.72	0.56	1.26	0.57

December 31, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($263,958K + $—K + $181,511K) ÷ $312,050K
= 1.43

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets. It is calculated by dividing quick assets (current assets minus inventory) by current liabilities.

Analyzing Chemed Corp.'s quick ratio over the past five years, we observe fluctuations in the company's ability to cover its short-term liabilities:

1. Dec 31, 2023: The quick ratio improved to 1.57, indicating that Chemed Corp. had $1.57 in quick assets available to cover each dollar of current liabilities. This suggests a strong liquidity position compared to the previous year.

2. Dec 31, 2022: The quick ratio decreased to 0.88, indicating a decline in liquidity compared to the prior year. This could signal potential challenges in meeting short-term obligations with available quick assets.

3. Dec 31, 2021: The quick ratio was 0.73, further declining from the previous year. This suggests a potential liquidity strain as the company may have had insufficient quick assets to cover its current liabilities.

4. Dec 31, 2020: The quick ratio improved to 1.08, reflecting a better liquidity position compared to the prior year. Chemed Corp. had $1.08 in quick assets for each dollar of current liabilities, which is a positive indicator.

5. Dec 31, 2019: The quick ratio was 0.70, showing a decrease in liquidity compared to the previous year. This may raise concerns about the company's ability to meet short-term obligations with available quick assets.

In summary, the trend in Chemed Corp.'s quick ratio shows fluctuations in its liquidity position over the past five years. Investors and stakeholders should closely monitor changes in the quick ratio to assess the company's short-term financial health and ability to meet obligations promptly.