CoreCivic Inc (CXW)

CoreCivic Inc's liquidity ratios show fluctuations over the years. The current ratio, which measures the company's ability to cover its short-term obligations with current assets, decreased from 2.29 in 2020 to 1.57 in 2024. This indicates a potential decrease in the company's short-term liquidity position.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, varied from 0.36 in 2020 to 0.38 in 2024. The quick ratio trend shows some improvement compared to the current ratio, albeit still remaining relatively low.

The cash ratio, which focuses solely on the company's ability to cover current liabilities with cash and cash equivalents, remained stable around 0.38 over the years. This suggests that CoreCivic Inc may have maintained a consistent level of cash reserves relative to its short-term obligations.

Overall, based on these liquidity ratios, CoreCivic Inc's liquidity position may have faced some challenges, as indicated by the decreasing current ratio trend. However, the stability in the cash ratio reflects a maintained level of cash reserves. Management should continue to monitor and improve the company's liquidity position to ensure its ability to meet short-term financial obligations.

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Additional liquidity measure

CoreCivic Inc's cash conversion cycle has shown a significant improvement over the years. At the end of 2020, the company's cash conversion cycle stood at 78.63 days, indicating that it took the company nearly 79 days to convert its investment in inventory into cash received from customers.

By the end of 2021, the cash conversion cycle dropped to 4.93 days, demonstrating a remarkable efficiency in managing inventory and collecting cash from sales. This trend continued into 2022 and 2023, with further reductions to 5.09 days and eventually to 0.00 days, respectively. A cash conversion cycle of 0.00 days implies that CoreCivic Inc is able to convert inventory into cash almost instantly upon making a sale.

Maintaining a low or zero cash conversion cycle is favorable for the company as it indicates efficient management of working capital and resources. This improvement in the cash conversion cycle over the years suggests that CoreCivic Inc has become more efficient in managing its inventory, collecting receivables, and optimizing cash flow processes.