CorVel Corp (CRVL)

CorVel Corp's liquidity ratios indicate the company's ability to meet its short-term obligations. The current ratio, which measures the firm's ability to cover its short-term liabilities with current assets, has generally been above 1 over the past five years, indicating a healthy liquidity position. The increasing trend from 1.56 in 2020 to 1.64 in 2024 suggests an improved ability to cover short-term obligations.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also shown an upward trend from 1.26 in 2020 to 1.33 in 2024. This indicates that CorVel Corp has a stronger ability to meet its short-term obligations without relying on slow-moving inventory.

The cash ratio, which is the most conservative liquidity measure as it only considers cash and cash equivalents, has varied over the years ranging from 0.42 in 2023 to 0.86 in 2021. The decrease to 0.57 in 2024 might indicate a reduced ability to cover short-term liabilities solely with cash on hand, but the ratio is still above 0.5, suggesting a decent liquidity position.

Overall, CorVel Corp's liquidity ratios show a generally favorable liquidity position, with improvements in the current ratio and quick ratio over the years. However, the company may want to monitor its cash ratio to ensure it maintains a sufficient level of cash reserves to cover short-term obligations.

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Additional liquidity measure

The cash conversion cycle of CorVel Corp has fluctuated over the past five years, with a range from a low of 42.29 days in 2020 to a high of 55.51 days in 2024. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A longer cash conversion cycle generally indicates that the company takes longer to recoup its investment in inventory and thus may face liquidity challenges.

In 2024, the cash conversion cycle increased to 55.51 days, which suggests that CorVel Corp took longer to convert its resources into cash compared to the previous year. This could be attributed to changes in the company's inventory turnover, accounts receivable collection period, or accounts payable payment period.

On the other hand, in 2020, the company had a lower cash conversion cycle of 42.29 days, indicating a more efficient conversion of resources into cash. This could imply that the company managed its inventory effectively, collected receivables promptly, and managed its payables efficiently during that period.

Overall, fluctuations in the cash conversion cycle of CorVel Corp over the five-year period may reflect changes in the company's operational efficiency, working capital management strategies, and overall financial performance. Investors and stakeholders should closely monitor these trends to assess the company's ability to efficiently manage its cash flows and working capital requirements.