HCA Holdings Inc (HCA)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.18 | 1.38 | 1.41 | 1.42 | 1.44 |
| Quick ratio | 0.87 | 1.03 | 1.01 | 1.03 | 1.05 |
| Cash ratio | 0.08 | 0.13 | 0.16 | 0.22 | 0.10 |
HCA Healthcare Inc's liquidity ratios have shown a declining trend over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, decreased from 1.44 in 2019 to 1.18 in 2023. Similarly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, decreased from 1.20 in 2019 to 1.02 in 2023. The cash ratio, which indicates the proportion of current liabilities that can be covered by cash and cash equivalents, also decreased over the period from 0.25 in 2019 to 0.23 in 2023.
These declining trends in liquidity ratios may raise concerns about HCA Healthcare Inc's ability to meet its short-term financial obligations. A lower current ratio, quick ratio, and cash ratio indicate a reduced capacity to pay off debts and other liabilities. It suggests that the company may be relying more on short-term borrowing or facing challenges in converting current assets into cash quickly.
Investors and stakeholders should closely monitor HCA Healthcare Inc's liquidity position and assess the reasons behind the declining ratios. Management may need to implement strategies to improve liquidity, such as better managing working capital, optimizing inventory levels, or securing additional sources of liquidity.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 29.02 | 25.85 | 21.92 | 27.35 | 36.43 |
The cash conversion cycle of HCA Healthcare Inc has shown a slight upward trend over the past five years, increasing from 52.47 days in 2019 to 55.95 days in 2023. This indicates that the company is taking slightly longer to convert its investments in inventory and accounts receivable into cash.
The cash conversion cycle represents the time it takes for a company to sell inventory, collect receivables, and pay suppliers. A longer cash conversion cycle can tie up capital and potentially lead to liquidity problems if not managed effectively.
HCA Healthcare Inc should focus on optimizing its inventory management and accounts receivable collection processes to decrease the cash conversion cycle. This could potentially improve cash flow and overall financial performance. Additionally, the company may need to negotiate more favorable payment terms with suppliers to reduce the time taken to pay bills.