Henry Schein Inc (HSIC)

Henry Schein Inc's liquidity ratios provide insights into its ability to meet short-term obligations.

1. Current Ratio:
The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Henry Schein's current ratio has been relatively stable over the past five years, ranging from 1.58 to 1.79. The current ratio is above 1 in each year, indicating that the company has more than enough current assets to cover its current liabilities. However, there has been a slight downward trend in recent years, which may signal a potential decrease in liquidity.

2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. Henry Schein's quick ratio has fluctuated over the years, ranging from 0.66 to 0.81. The quick ratio has generally been low, indicating that the company may have difficulty meeting its short-term obligations without relying on inventory. However, the quick ratio improved in 2020 before declining again in 2023.

3. Cash Ratio:
The cash ratio measures the company's ability to cover its short-term liabilities with cash and cash equivalents alone. Henry Schein's cash ratio has also varied significantly, with values ranging from 0.05 to 0.18. The low cash ratio suggests that the company relies heavily on non-cash current assets to meet its short-term obligations. The significant decrease in the cash ratio in 2020 is noteworthy and may indicate a shift in the company's cash management strategy.

In conclusion, Henry Schein Inc has maintained a reasonable level of liquidity over the years, as indicated by its current ratio consistently above 1. However, the decreasing trend in the quick ratio and fluctuations in the cash ratio warrant further attention to ensure the company's ability to meet short-term obligations in the future.

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Additional liquidity measure

The cash conversion cycle of Henry Schein Inc has shown some fluctuation over the past five years. The company's cash conversion cycle increased from 65.98 days in 2019 to 80.23 days in 2023, indicating a longer period to convert its investments in inventory and receivables into cash. This may suggest potential challenges in managing the company's working capital efficiently.

In 2020 and 2021, there was a slight decrease in the cash conversion cycle to 70.65 days and 67.99 days, respectively, which could indicate improvements in inventory management or accounts receivable collection processes. However, this trend reversed in 2022 and 2023, with the cash conversion cycle rising again.

Overall, a higher cash conversion cycle may tie up more of the company's cash in operations, potentially impacting its liquidity and financial flexibility. It would be essential for Henry Schein Inc to continually assess and optimize its working capital management to improve its cash conversion cycle and enhance overall financial performance.