The Ensign Group Inc (ENSG)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.42 | 1.34 | 1.22 | 1.04 | 1.20 |
| Quick ratio | 1.38 | 1.27 | 1.16 | 0.99 | 1.12 |
| Cash ratio | 0.72 | 0.57 | 0.53 | 0.44 | 0.22 |
The liquidity ratios of Ensign Group Inc indicate the company's ability to meet its short-term obligations.
1. Current Ratio: The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has been improving over the past five years. The ratio was 1.42 in 2023, up from 1.34 in 2022, and significantly higher compared to 1.20 in 2019. This indicates that Ensign Group Inc has a healthier liquidity position and is better equipped to meet its current liabilities.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Ensign Group Inc's quick ratio has also shown a positive trend, aligning closely with the current ratio. The ratio was 1.42 in 2023, reflecting the company's strong ability to meet short-term obligations without relying on inventory.
3. Cash Ratio: The cash ratio, which specifically focuses on the company's ability to cover its short-term liabilities with cash and cash equivalents, has shown significant improvement over the years. Ensign Group Inc's cash ratio increased to 0.76 in 2023, up from 0.30 in 2019. This indicates that the company holds a higher proportion of liquid assets relative to its current liabilities, enhancing its liquidity position.
In summary, Ensign Group Inc's liquidity ratios demonstrate a positive trend, with improvements in both the current ratio, quick ratio, and cash ratio over the years. This suggests that the company has sufficient liquid assets to meet its short-term obligations and indicates a stronger financial position in terms of liquidity.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 37.01 | 38.76 | 35.91 | 37.05 | 46.14 |
The cash conversion cycle of Ensign Group Inc has fluctuated in recent years, ranging from 35.16 days to 45.25 days. A lower cash conversion cycle indicates that the company is able to convert its investments in inventory and accounts receivable back into cash more quickly.
In 2023, the cash conversion cycle decreased to 35.95 days from 37.32 days in 2022, showing an improvement in the efficiency of Ensign Group's cash management. This could be attributed to better inventory management and faster collection of accounts receivable.
Comparing to 2019 where the cash conversion cycle was at 45.25 days, the reduction to 35.95 days in 2023 reflects a significant enhancement in Ensign Group Inc's cash conversion efficiency over the years.
Overall, the trend in the cash conversion cycle suggests that Ensign Group Inc has been successful in managing its working capital effectively and optimizing the cash flow conversion process. This should be viewed positively by investors and indicates good financial health and operational efficiency within the company.