Cigna Corp (CI)

Based on the provided data for Cigna Corp's liquidity ratios from 2020 to 2024, let's analyze the trends in the key ratios:

1. Current Ratio:
a. The current ratio measures the company's ability to pay its short-term obligations with its current assets. An ideal current ratio is typically above 1, indicating the company has more current assets than current liabilities.
b. Cigna Corp's current ratio improved significantly from 1.30 in 2020 to 2.84 in 2021, and remained relatively stable around 2.67 in 2022. However, there was a notable decline to 0.77 in 2023 and a slight increase to 0.84 in 2024.
c. The significant increase in 2021 suggests an improvement in Cigna Corp's short-term liquidity position, but the subsequent drops in 2023 and 2024 may raise concerns about its ability to cover short-term obligations.

2. Quick Ratio:
a. The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets.
b. Cigna Corp's quick ratio followed a similar trend to the current ratio, increasing from 0.52 in 2020 to 0.65 in 2021, then decreasing to 0.18 in 2023 and 0.14 in 2024.
c. The declining trend in the quick ratio indicates a reduced ability to meet short-term obligations without relying on inventory, which may signal liquidity challenges in 2023 and 2024.

3. Cash Ratio:
a. The cash ratio is the most conservative liquidity ratio, measuring the company's ability to cover current liabilities with its cash and cash equivalents alone.
b. Cigna Corp's cash ratio mirrored the trends in the current and quick ratios, showing an improvement from 0.52 in 2020 to 0.65 in 2021, and then declining to 0.18 in 2023 and 0.14 in 2024.
c. The decreasing cash ratio underscores a potential liquidity strain, especially in 2023 and 2024, indicating a reduced ability to settle short-term obligations with cash reserves only.

In conclusion, while Cigna Corp's liquidity ratios exhibited improvement in 2021, the subsequent declines in 2023 and 2024 raise concerns about the company's short-term liquidity position. Further monitoring and analysis of the company's liquidity management practices may be necessary to address potential liquidity risks.

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See also:

Cigna Corp Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle is an important metric that reflects the efficiency of a company's working capital management. For Cigna Corp, the cash conversion cycle has shown some fluctuations over the years.

As of December 31, 2020, Cigna's cash conversion cycle was 35.32 days, indicating that the company took around 35 days to convert its investments in inventory into cash receipts from customers.

By December 31, 2021, the cash conversion cycle had slightly increased to 40.48 days, suggesting a slight delay in the company's ability to convert inventory into cash.

The trend continued into 2022, with the cash conversion cycle further increasing to 54.14 days. This could indicate potential challenges in managing working capital efficiently or a need for improvements in inventory management.

By the end of 2023, Cigna's cash conversion cycle had increased to 56.90 days, possibly pointing towards an extended period to convert inventory into cash, impacting the company's liquidity position.

Interestingly, as of December 31, 2024, the cash conversion cycle is reported as 0.00 days. This might indicate a data anomaly or a significant change in the company's operations that requires further investigation.

In conclusion, Cigna Corp's cash conversion cycle has experienced fluctuations over the years, with some periods showing delays in converting inventory into cash. Monitoring and managing the cash conversion cycle effectively is crucial for optimizing working capital and ensuring the company's financial health.