Enhabit Inc. (EHAB)

Based on the liquidity ratios of Enhabit Inc., we observe the following trends:

1. Current Ratio: The current ratio measures the company's ability to meet its short-term obligations with its current assets. Enhabit Inc.'s current ratio ranged from 1.41 to 1.62 over the past four quarters, with an average of 1.56. This indicates that the company generally has more than enough current assets to cover its current liabilities.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity as it excludes inventory from current assets. Enhabit Inc.'s quick ratio ranged from 1.33 to 1.52 over the past four quarters, with an average of 1.44. This suggests that the company has an acceptable level of liquidity, even when excluding inventory from the calculation.

3. Cash Ratio: The cash ratio is the most conservative liquidity ratio, measuring the company's ability to cover its current liabilities with its cash and cash equivalents only. Enhabit Inc.'s cash ratio varied from 0.17 to 0.33 over the past four quarters, with an average of 0.26. This indicates that the company may have a lower level of liquidity when considering only cash on hand to meet its short-term obligations.

Overall, Enhabit Inc. has maintained relatively stable liquidity ratios over the past year, with the current and quick ratios generally above 1, indicating a healthy liquidity position. However, the cash ratio fluctuated more significantly, suggesting potential variations in the company's cash position over the quarters. It is important for Enhabit Inc. to continue monitoring and managing its liquidity effectively to ensure it can meet its short-term financial obligations.

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Additional liquidity measure

The cash conversion cycle of Enhabit Inc. fluctuated over the year 2023, ranging from a low of 53.13 days in June to a high of 60.93 days in September. This metric represents the average number of days it takes for a company to convert its investments in inventory and other resources into cash from sales and then back into cash through collections from customers.

A decreasing trend in the cash conversion cycle is generally positive as it indicates that the company is managing its working capital more efficiently. On the other hand, an increasing trend can signify potential issues in managing inventory, accounts receivable, or accounts payable, which may lead to cash flow challenges.

Enhabit Inc. should closely monitor its cash conversion cycle dynamics to ensure effective management of its resources and working capital, ultimately aiming to optimize cash flow and operational efficiency.