GE HealthCare Technologies Inc. (GEHC)

Based on the provided data, let's analyze the liquidity ratios of GE HealthCare Technologies Inc. over the three-year period:

1. Current Ratio: The current ratio measures the company's ability to cover its short-term obligations with its short-term assets. A current ratio of greater than 1 indicates that the company can meet its current liabilities. GE HealthCare Technologies Inc. had a slight decrease in its current ratio from 1.16 in 2022 to 1.05 in 2023 and further to 1.04 in 2024. While the ratios are above 1 in all years, the decreasing trend suggests a potential strain on the company's short-term liquidity position.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. A quick ratio below 1 may indicate potential difficulty in meeting short-term obligations without relying on inventory sales. GE HealthCare Technologies Inc. experienced a significant decline in its quick ratio from 0.67 in 2022 to 0.28 in 2023 and slightly improved to 0.31 in 2024. The declining trend raises concerns about the company's ability to meet immediate obligations with its most liquid assets.

3. Cash Ratio: The cash ratio measures the company's ability to cover its current liabilities with its cash and cash equivalents alone. A higher cash ratio is generally preferred as it signifies a stronger ability to cover short-term obligations without relying on other current assets. GE HealthCare Technologies Inc. had a cash ratio of 0.20 in 2022, which increased to 0.28 in 2023 and further to 0.30 in 2024. The improving trend in the cash ratio indicates a strengthening ability to meet short-term liabilities with readily available cash resources.

In summary, GE HealthCare Technologies Inc. showed mixed performance in its liquidity ratios over the three-year period. While the current ratio remained above 1, indicating a capacity to cover short-term liabilities, the declining trend in the quick ratio raises concerns about the company's ability to meet immediate obligations without relying on inventory. However, the improving cash ratio signals a positive development in the company's ability to cover short-term obligations with cash and cash equivalents. Further analysis and monitoring of liquidity management are recommended to ensure sustainable financial health.

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Additional liquidity measure

The cash conversion cycle of GE HealthCare Technologies Inc. has shown a significant improvement over the past few years. As of December 31, 2022, the company had a negative cash conversion cycle of -0.57 days, indicating that it was able to convert its inventory into cash very quickly. By December 31, 2023, the cash conversion cycle had further improved to -83.47 days, suggesting that the company was managing its cash flow more efficiently.

As of December 31, 2024, the cash conversion cycle stood at -90.67 days, indicating that the company had continued to streamline its operations and optimize its working capital management. A negative cash conversion cycle implies that GE HealthCare Technologies Inc. was able to collect cash from its customers before paying its suppliers, resulting in improved liquidity and operational efficiency.

Overall, the consistent reduction in the cash conversion cycle reflects the company's ability to efficiently manage its working capital, convert inventory into cash, and collect receivables promptly. This positive trend indicates effective cash flow management and operational performance within GE HealthCare Technologies Inc.