HealthEquity Inc (HQY)

HealthEquity Inc has shown a consistent improvement in its liquidity ratios over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has increased from 1.96 in 2020 to 4.76 in 2024. This indicates that the company has a strong ability to meet its short-term obligations.

Similarly, the quick ratio, also known as the acid-test ratio, has shown a positive trend, increasing from 1.73 in 2020 to 4.35 in 2024. This ratio provides a more conservative measure of liquidity by excluding inventory from current assets.

The cash ratio, which indicates the proportion of a company's current assets that are in cash or cash equivalents, has also seen improvement over the years. HealthEquity Inc's cash ratio has increased from 1.26 in 2020 to 3.45 in 2024, showing an increasing ability to cover short-term liabilities with cash on hand.

Overall, the improving liquidity ratios of HealthEquity Inc suggest that the company has strengthened its short-term financial position and is better equipped to meet its financial obligations. This trend could indicate efficient management of working capital and increased financial stability.

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Additional liquidity measure

The cash conversion cycle of HealthEquity Inc has shown fluctuations over the past five years. In the most recent fiscal year ending on January 31, 2024, the company's cash conversion cycle stood at 34.34 days, representing a slight decrease from the previous year's 36.23 days. This reduction indicates an improvement in the efficiency with which the company manages its working capital.

Comparing the latest figure to the data from five years ago, the trend reveals a notable enhancement in the company's cash conversion cycle. In January 2020, the cycle was significantly longer at 47.54 days, reflecting possible inefficiencies in working capital management at that time. Subsequent years saw a gradual decrease in the cycle duration, reaching a low of 29.79 days in January 2022, before a slight increase in the following year.

Overall, the decreasing trend in the cash conversion cycle suggests that HealthEquity Inc has been more effective in managing its cash flows, receivables, and payables over the years. A shorter cash conversion cycle indicates that the company is able to convert its investments in inventory and receivables into cash more quickly, which can lead to improved liquidity and financial performance.