Molina Healthcare Inc (MOH)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.62 | 1.54 | 1.47 | 1.43 | 1.59 |
| Quick ratio | 1.56 | 1.49 | 1.43 | 1.39 | 1.55 |
| Cash ratio | 1.14 | 1.11 | 1.09 | 1.08 | 1.21 |
Molina Healthcare Inc's liquidity ratios have shown a somewhat stable trend over the years.
1. Current Ratio: The current ratio, which measures the company's ability to meet short-term obligations with its current assets, decreased from 1.59 in 2020 to 1.43 in 2021 before gradually increasing to 1.62 in 2024. Overall, the company's current ratio indicates that it has sufficient current assets to cover its short-term liabilities.
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. Molina Healthcare Inc's quick ratio followed a similar pattern to the current ratio, decreasing from 1.55 in 2020 to 1.39 in 2021 before improving to 1.56 in 2024. This indicates that the company has a comfortable level of quick assets to cover its current liabilities.
3. Cash Ratio: The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover current liabilities with its cash and cash equivalents. Molina Healthcare Inc's cash ratio ranged from 1.08 in 2021 to 1.14 in 2024, showing a gradual improvement in its ability to cover short-term obligations with cash on hand.
Overall, Molina Healthcare Inc's liquidity ratios suggest that the company has maintained a solid liquidity position, with a sufficient level of current assets and cash reserves to meet its short-term financial obligations.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 29.62 | 33.25 | 26.28 | 28.61 | 31.42 |
The cash conversion cycle of Molina Healthcare Inc has shown a declining trend over the past five years, decreasing from 31.42 days as of December 31, 2020, to 29.62 days as of December 31, 2024. This indicates that the company has been able to improve its efficiency in managing its working capital during this period. The lowest point was reached on December 31, 2022, at 26.28 days, suggesting a particularly effective management of cash, inventory, and accounts receivable during that year. However, there was a slight uptick in the cash conversion cycle to 33.25 days as of December 31, 2023, which may warrant further investigation to understand the factors contributing to this increase. Overall, a decreasing trend in the cash conversion cycle is generally seen as positive as it signifies improved liquidity and operational efficiency for the company.