Elevance Health Inc (ELV)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.44 | 1.40 | 1.47 | 1.55 | 1.66 |
| Quick ratio | 0.85 | 0.85 | 0.93 | 1.03 | 1.09 |
| Cash ratio | 0.87 | 0.86 | 0.95 | 1.04 | 1.09 |
The liquidity ratios of Elevance Health Inc have shown a slight fluctuation over the past five years.
The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, has been gradually decreasing from 1.65 in 2019 to 1.44 in 2023. While the current ratio is above 1, indicating the company can meet its short-term obligations, the downward trend suggests a potential decrease in liquidity in recent years.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Elevance Health Inc's quick ratio has also experienced a decline over the years, from 1.44 in 2019 to 1.28 in 2023. This indicates a potential decrease in the company's ability to cover its short-term liabilities without relying on the sale of inventory.
The cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, has shown a fluctuating pattern, ranging from 0.81 in 2022 to 1.00 in 2019. The decrease in the cash ratio over the past two years to 0.85 in 2023 suggests that the company may have less cash available to meet its immediate obligations.
Overall, while Elevance Health Inc maintains liquidity ratios above 1, signaling an ability to meet short-term obligations, the declining trend in these ratios over the years may indicate a potential strain on the company's liquidity position. It is important for the company to closely monitor and manage its liquidity to ensure it can meet its financial commitments in the future.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 0.00 | 0.00 | 0.00 | 0.00 | 0.33 |
The cash conversion cycle of Elevance Health Inc has shown a fluctuating trend over the past five years. In 2023, the company's cash conversion cycle increased to 38.31 days from 37.62 days in 2022. This indicates that it took slightly longer for the company to convert its resource investments, such as raw materials and labor, into cash during 2023 compared to the previous year.
When compared to 2021, where the cash conversion cycle was 35.82 days, the cycle has shown a continual upward trend, suggesting potential inefficiencies in the company's cash management processes. However, the cash conversion cycle in 2023 is still shorter than in 2019, indicating some improvement in the efficiency of the company in converting inputs into cash.
Overall, the company should aim to reduce its cash conversion cycle to improve liquidity and operational efficiency. A shorter cash conversion cycle indicates that the company is managing its working capital effectively and can free up cash for other investments or operations. Monitoring and analyzing the cash conversion cycle can help Elevance Health Inc identify areas for improvement and enhance its financial performance in the long term.