Hims Hers Health Inc (HIMS)

Based on the provided data, we can observe the following trends in Hims Hers Health Inc's liquidity ratios over the past five years:

1. Current Ratio: The current ratio measures the company's ability to cover its short-term obligations with its current assets. Hims Hers Health Inc's current ratio has fluctuated over the years, ranging from 1.69 in 2019 to 7.43 in 2020, with the latest value standing at 3.00 as of December 31, 2023. A current ratio above 1 indicates that the company has more current assets than current liabilities, and higher values suggest a stronger liquidity position.

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. Hims Hers Health Inc's quick ratio has also varied, with the highest value of 40.07 in 2019, potentially due to significant cash reserves or highly liquid assets. The quick ratio as of December 31, 2023, is 2.57, indicating the company's ability to meet its short-term obligations with its most liquid assets.

3. Cash Ratio: The cash ratio focuses solely on cash and cash equivalents compared to current liabilities, providing insight into the company's immediate ability to cover debts without relying on other current assets. Hims Hers Health Inc's cash ratio has followed a similar trend to the quick ratio, with the highest value of 40.07 in 2019. As of December 31, 2023, the cash ratio stands at 2.50, highlighting the company's cash position relative to its short-term liabilities.

Overall, Hims Hers Health Inc has shown fluctuations in its liquidity ratios over the years, with the latest figures indicating a healthy liquidity position. The company has maintained current, quick, and cash ratios above 1, suggesting a strong ability to meet its short-term obligations with its current assets, liquid assets, and cash reserves. However, it is essential to monitor these ratios regularly to ensure ongoing liquidity and financial stability.

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Additional liquidity measure

The cash conversion cycle of Hims Hers Health Inc has fluctuated over the past five years. In 2019, the company had a positive cash conversion cycle of 40.38 days, indicating that it took 40.38 days on average to convert its investments in inventory and other resources into cash from sales. However, by 2020, the company significantly improved its cash conversion cycle to -39.30 days, which suggests that it was able to convert its resources into cash at a faster rate and even generate excess cash.

In the following years, the trend continued to show improvements in the cash conversion cycle, with further reductions to -27.44 days in 2021 and -30.65 days in 2022. This indicates that the company's efficiency in managing working capital and turning inventory and accounts receivable into cash continued to improve.

However, in 2023, the cash conversion cycle decreased further to -45.09 days, which may warrant a closer look at the company's operations. While a negative cash conversion cycle can indicate efficient cash flow management and swift conversion of investments into cash, an overly negative cycle may suggest potential issues such as aggressive cash management policies or delays in paying suppliers.

Overall, the fluctuating trend in Hims Hers Health Inc's cash conversion cycle indicates varying levels of efficiency in managing working capital and converting investments into cash over the years. Further analysis of the company's financial and operational performance would be necessary to fully understand the factors driving these changes.