Geo Group Inc (GEO)

The liquidity ratios of Geo Group, Inc. provide insights into the company's ability to meet its short-term obligations.

The current ratio, which is a measure of the company's ability to cover its short-term liabilities with its short-term assets, has decreased over the years, from 2.49 in 2021 to 1.21 in 2023. This downward trend indicates a potential weakening in the company's liquidity position, as the current assets are becoming less sufficient to cover current liabilities.

Similarly, the quick ratio, also known as the acid-test ratio, shows a downward trend, decreasing from 2.44 in 2021 to 1.21 in 2023. The quick ratio excludes inventory from the current assets, providing a more stringent assessment of the company's ability to meet short-term obligations. The decreasing trend indicates a potential decrease in the company's ability to quickly cover its immediate liabilities without relying on inventory.

The cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, has experienced fluctuations over the years. Although the ratio increased notably in 2021 to 1.46, it dropped back to 0.32 in 2023. This significant decrease may signal potential challenges in the company's ability to meet its short-term obligations solely from its readily available cash reserves.

In conclusion, based on the liquidity ratios analysis, it appears that Geo Group, Inc. may be facing some challenges in maintaining a strong liquidity position, as evidenced by the decreasing trends in the current, quick, and cash ratios over the years. The company may need to closely monitor its liquidity management to ensure it can meet its short-term obligations effectively.

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Additional liquidity measure

The cash conversion cycle for Geo Group, Inc. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle decreased to 58.99 days from 63.95 days in 2022. This indicates that the company took slightly less time to convert its investments in inventory and other resources back into cash during the most recent year.

Compared to 2021 and 2020, where the cash conversion cycle was 60.18 days and 57.30 days, respectively, the cycle lengthened slightly in 2023. However, it was lower than the cycle length in 2019, which was 65.13 days. This suggests that Geo Group, Inc. has made improvements in managing its inventory, accounts receivable, and accounts payable to enhance its cash conversion efficiency over the past year.

Overall, a decreasing cash conversion cycle is a positive indicator as it shows that the company is managing its working capital effectively and turning its assets into cash more quickly. Geo Group, Inc. should continue to focus on optimizing its operations to further reduce its cash conversion cycle in the future.