Quest Diagnostics Incorporated (DGX)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.31 | 1.12 | 0.92 | 1.34 | 1.22 | 1.46 | 1.54 | 1.46 | 1.56 | 1.62 | 1.38 | 1.76 | 1.72 | 1.40 | 1.29 | 1.38 | 1.25 | 0.88 | 0.82 | 0.78 |
| Quick ratio | 1.04 | 0.88 | 0.73 | 1.05 | 0.97 | 1.24 | 1.32 | 1.23 | 1.32 | 1.47 | 1.24 | 1.53 | 1.80 | 1.47 | 1.15 | 1.16 | 1.13 | 0.77 | 0.71 | 0.68 |
| Cash ratio | 0.38 | 0.09 | 0.07 | 0.13 | 0.20 | 0.44 | 0.50 | 0.42 | 0.50 | 0.63 | 0.43 | 0.72 | 0.95 | 0.87 | 0.54 | 0.30 | 0.60 | 0.22 | 0.14 | 0.20 |
Quest Diagnostics, Inc. has shown some fluctuations in its liquidity ratios over the past quarters.
1. Current Ratio:
The current ratio, which indicates the company's ability to cover its short-term liabilities with its short-term assets, has varied between 0.92 and 1.54 in the past eight quarters. A ratio above 1 indicates that Quest Diagnostics has more current assets than current liabilities. The company's current ratio has generally been above 1, indicating good short-term liquidity, although there was a significant drop in Q2 2023.
2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it considers only the most liquid assets (such as cash and accounts receivable) to cover current liabilities. Quest Diagnostics' quick ratio has ranged from 0.83 to 1.42 in the last two years. Similar to the current ratio, the quick ratio has generally been above 1, suggesting that the company has a relatively healthy ability to meet its short-term obligations.
3. Cash Ratio:
The cash ratio, the most conservative measure of liquidity, focuses solely on the company's ability to cover current liabilities with cash and cash equivalents. Quest Diagnostics' cash ratio has fluctuated between 0.17 and 0.60 over the past eight quarters. A cash ratio below 1 indicates that the company may not be able to cover all of its current liabilities with its cash on hand alone.
In conclusion, while the current and quick ratios have generally depicted decent liquidity positions for Quest Diagnostics, the cash ratio has shown some concerning fluctuations. Further monitoring and analysis of the company's cash management practices may be warranted to ensure stronger liquidity levels in the future.
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 37.46 | 61.88 | 58.87 | 59.25 | 37.29 | 56.20 | 55.54 | 58.46 | 41.12 | 60.53 | 52.88 | 62.20 | 44.77 | 76.06 | 65.77 | 55.42 | 40.07 | 61.53 | 60.16 | 59.48 |
The cash conversion cycle of Quest Diagnostics, Inc. is a key metric that indicates the time it takes for the company to convert its investments in inventory and other resources into cash generated from sales. A lower cash conversion cycle is generally preferred as it signifies faster conversion of investments into cash.
Looking at the data provided, the trend in Quest Diagnostics' cash conversion cycle shows some fluctuations over the past eight quarters. In Q4 2023, the cash conversion cycle was relatively low at 36.67 days, indicating efficient management in converting investments into cash. However, in Q3 2023, there was a significant increase to 61.09 days, suggesting that the company took longer to convert its resources into cash during that period.
Comparing the data across different quarters, it is observed that the cash conversion cycle fluctuated between 36.66 days and 61.09 days with no clear trend. This variability might indicate challenges in managing working capital effectively, impacting the company's ability to convert investments into cash quickly.
Overall, Quest Diagnostics, Inc. should continue to monitor and potentially improve its cash conversion cycle to ensure efficient management of working capital and optimize cash flow generation from its operations.