Geo Group Inc (GEO)

Geo Group Inc's liquidity ratios have fluctuated over the years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, improved from 1.73 in December 2020 to 2.49 in December 2021 but then declined to 1.27 by December 2022 and further to 1.21 by December 2023, before recovering slightly to 1.47 by December 2024. This indicates some volatility in the company's current asset management.

In terms of the quick ratio, which excludes inventory from current assets and provides a more stringent measure of liquidity, Geo Group Inc's ratio improved significantly from 0.75 in December 2020 to 1.34 in December 2021, but then dropped sharply to 0.22 in December 2022 and remained low at 0.21 in December 2023 and 0.23 in December 2024. This suggests that the company may have struggled to meet its short-term obligations using its most liquid assets.

The cash ratio, representing the most liquid assets compared to current liabilities, followed a similar trend to the quick ratio, indicating the company's reliance on highly liquid assets to cover short-term financial obligations. The ratio improved from 0.75 in December 2020 to 1.34 in December 2021, but then decreased to 0.22 in December 2022, remained at 0.21 in December 2023, and was at 0.23 in December 2024.

Overall, Geo Group Inc's liquidity ratios show some inconsistency and may indicate challenges in managing its short-term obligations efficiently, especially in the years following 2021. Further analysis and monitoring of these ratios would be beneficial to assess the company's liquidity position accurately.

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Additional liquidity measure

Geo Group Inc's cash conversion cycle has shown a consistent improvement over the years, indicating enhanced efficiency in managing its working capital. In 2020, the company's cash conversion cycle was 5.49 days, which decreased to 4.52 days by the end of 2021.

Remarkably, by the end of 2022, 2023, and 2024, the company achieved a cash conversion cycle of 0.00 days, suggesting that Geo Group Inc manages to convert its investments in inventory and accounts receivable into cash almost immediately, or even before paying its accounts payable.

This trend signifies that Geo Group Inc has been able to optimize its operations by reducing the time it takes to sell inventory, collect receivables, and pay suppliers. Such efficiency in the cash conversion cycle can lead to improved liquidity, better cash flow management, and enhanced overall financial performance for the company.