Quest Diagnostics Incorporated (DGX)

Based on the liquidity ratios provided for Quest Diagnostics Incorporated, we can observe the following trends:

1. Current Ratio: The current ratio measures the company's ability to meet its short-term obligations with its short-term assets. Quest Diagnostics' current ratio fluctuated over the period, ranging from a low of 0.92 on June 30, 2023, to a high of 1.76 on March 31, 2021. The ratio generally stayed above 1, indicating that the company has had sufficient current assets to cover its current liabilities.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. Quest Diagnostics' quick ratio varied between 0.07 on June 30, 2023, and 0.95 on December 31, 2020. The trend shows some fluctuations, with the ratio sometimes falling below 1, indicating potential challenges in meeting short-term obligations without relying on inventory.

3. Cash Ratio: The cash ratio is the most conservative liquidity ratio, focusing solely on the ability to cover current liabilities with cash and cash equivalents. Quest Diagnostics' cash ratio mirrored the quick ratio trend, ranging from 0.07 on June 30, 2023, to 0.95 on December 31, 2020. The company generally maintained a cash ratio below 1, highlighting the reliance on other current assets to meet short-term obligations.

Overall, while Quest Diagnostics generally maintained current ratios above 1, indicating a healthy ability to cover short-term liabilities, the quick and cash ratios at times fell below 1, suggesting potential liquidity challenges in meeting immediate obligations without relying on inventory or increasing cash reserves. It is essential for the company to monitor these ratios closely to ensure adequate liquidity management in the future.

---

Additional liquidity measure

The cash conversion cycle of Quest Diagnostics Incorporated has shown a fluctuating trend over the years. It measures the number of days it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

From March 31, 2020, to December 31, 2024, the cash conversion cycle ranged from a low of 9.08 days to a high of 14.03 days. In general, the company has managed to keep its cash conversion cycle relatively low, indicating efficiency in managing its working capital.

There was a slight increase in the cash conversion cycle from the end of 2020 to the beginning of 2021, but thereafter, it started to decline again, reaching its lowest point of 10.13 days by September 30, 2022. This suggests that Quest Diagnostics has been effective in managing its inventories and collecting payments from customers in a timely manner.

However, there was a mild increase in the cash conversion cycle towards the end of the period, standing at 10.28 days by December 31, 2024. It will be essential for Quest Diagnostics to monitor this trend to ensure that its working capital management remains efficient to support the company's operations and growth in the future.