Encompass Health Corp (EHC)
Quick ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 69,100 | 21,800 | 49,400 | 185,600 | 60,000 |
| Short-term investments | US$ in thousands | 37,600 | — | 5,400 | 38,400 | 34,800 |
| Receivables | US$ in thousands | 611,600 | 536,800 | 515,800 | 572,800 | 506,100 |
| Total current liabilities | US$ in thousands | 656,400 | 575,900 | 748,800 | 717,300 | 721,000 |
| Quick ratio | 1.09 | 0.97 | 0.76 | 1.11 | 0.83 |
December 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($69,100K
+ $37,600K
+ $611,600K)
÷ $656,400K
= 1.09
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets. A quick ratio of 1 or higher is generally considered favorable as it indicates that the company can cover its short-term liabilities using its quick assets.
Encompass Health Corp's quick ratio has demonstrated a relatively stable trend over the past five years. In 2023, the quick ratio improved to 1.23 from 1.19 in 2022, indicating an enhanced ability to meet short-term obligations. This improvement suggests that the company may have increased its liquid assets relative to its current liabilities, which is a positive sign for short-term financial health.
Comparing the 2023 quick ratio with historical values, it is at a similar level to 1.23 reported in 2020. This consistency suggests that Encompass Health Corp has maintained a strong liquidity position over the years, which is crucial for managing operational and financial risks effectively. However, it is important to note the significant improvement from the quick ratio of 0.97 in 2019, indicating enhanced liquidity management and reduced short-term solvency risk.
Overall, the quick ratio of Encompass Health Corp indicates a healthy liquidity position in 2023, providing confidence in the company's ability to meet its short-term financial obligations. It is essential to continue monitoring the quick ratio in conjunction with other financial metrics to assess the company's overall financial health accurately.
Peer comparison
Dec 31, 2023