Encompass Health Corp (EHC)

Encompass Health Corp's liquidity ratios provide insight into the company's ability to meet short-term obligations. The current ratio has shown a slightly increasing trend over the past five years, indicating that Encompass Health's current assets are sufficient to cover its current liabilities. As of December 31, 2023, the current ratio stands at 1.28, which suggests a healthy liquidity position.

The quick ratio, which excludes inventory from current assets, has also shown a generally increasing trend, reaching 1.23 in 2023. This signifies that Encompass Health has a favorable ability to meet its short-term obligations using its most liquid assets.

Examining the cash ratio, which specifically focuses on the company's ability to cover current liabilities with cash and cash equivalents, reveals a fluctuating pattern over the past five years. As of December 31, 2023, the cash ratio stands at 0.30, indicating that Encompass Health may have a lower level of cash compared to its current liabilities.

Overall, Encompass Health Corp's liquidity ratios have generally depicted a positive trend, with the current and quick ratios showing improvement. However, the declining trend in the cash ratio raises the need for the company to manage its cash position effectively to ensure continued liquidity in the future.

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Additional liquidity measure

The cash conversion cycle of Encompass Health Corp has exhibited some fluctuation over the past five years. In 2023, the company's cash conversion cycle stood at 46.50 days, a slight increase from the prior year. This metric indicates the average number of days it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

Comparing the 2023 figure to historical data, we observe that the cash conversion cycle has been relatively stable, with some variability noted in different years. The company managed to effectively manage its working capital to ensure efficient operations and cash flow generation, albeit with moderate fluctuations.

Overall, the cash conversion cycle for Encompass Health Corp reflects the company's effectiveness in managing its operating cycle and converting its resources into cash, albeit with some variability in performance over the last five years.