Humana Inc (HUM)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.59 | 1.52 | 1.62 | 1.77 | 1.82 |
| Quick ratio | 1.24 | 1.20 | 1.20 | 1.37 | 1.47 |
| Cash ratio | 1.13 | 1.10 | 1.08 | 1.29 | 1.37 |
Based on the data provided, Humana Inc.'s liquidity ratios have shown some fluctuations 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 exhibited a decreasing trend, declining from 1.82 in 2019 to 1.59 in 2023. Although the current ratio remains above 1 in all years, indicating that the company has more current assets than current liabilities, the downward trend might suggest a decreasing ability to meet short-term obligations.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Similar to the current ratio, the quick ratio has shown a declining trend over the period, from 1.45 in 2019 to 1.34 in 2023. This indicates that the company may have relied more on inventory to meet immediate obligations in recent years.
The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover its short-term liabilities using only cash and cash equivalents. Humana Inc.'s cash ratio has also decreased over the years, from 1.35 in 2019 to 1.23 in 2023. This suggests that the company's liquidity position in terms of cash available has weakened over time.
Overall, the decreasing trend in liquidity ratios for Humana Inc. implies a potential decrease in its ability to meet short-term obligations without relying on inventory or other less liquid assets. This trend should be monitored closely, as it may indicate a need to improve the company's cash management practices or working capital efficiency to ensure financial stability.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 6.98 | 6.58 | 7.97 | 5.38 | 5.94 |
The cash conversion cycle of Humana Inc. has experienced fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 6.98 days compared to 6.58 days in 2022. This indicates that the company took longer to convert its investments in inventory and accounts receivables into cash in 2023.
In 2021, the cash conversion cycle was 7.97 days, which was significantly higher than the previous two years. This may suggest inefficiencies in the company's cash management processes or challenges in collecting receivables or managing inventory levels.
On the other hand, in 2020 and 2019, the company's cash conversion cycle was relatively lower at 5.38 days and 5.94 days, respectively. This indicates that the company was able to convert its investments into cash more efficiently during those years.
Overall, the fluctuations in Humana Inc.'s cash conversion cycle over the past five years may reflect changes in the company's working capital management strategies, operational efficiency, or external economic conditions affecting the healthcare industry. Further analysis of the underlying components of the cash conversion cycle, such as days inventory outstanding and days sales outstanding, could provide additional insights into the company's cash management performance.