National HealthCare Corporation (NHC)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.81 | 1.89 | 1.79 | 1.62 | 1.62 |
| Quick ratio | 1.50 | 1.55 | 1.43 | 1.34 | 1.47 |
| Cash ratio | 0.92 | 1.04 | 0.92 | 0.97 | 1.15 |
The liquidity ratios of National HealthCare Corporation show a stable overall liquidity position over the years. The current ratio remained relatively consistent, ranging from 1.62 in 2020 to 1.81 in 2024. A current ratio above 1 indicates the company's ability to cover its short-term obligations with its current assets.
The quick ratio, which excludes inventory from current assets, also shows consistency with values ranging from 1.34 to 1.55 over the years. This indicates that the company can meet its immediate short-term liabilities without relying on selling inventory.
However, the cash ratio experienced some fluctuations, with a decrease from 1.15 in 2020 to 0.92 in both 2022 and 2024. This suggests that the company may have a lower ability to cover its current liabilities with its available cash and cash equivalents.
Overall, the stability and adequacy of the current and quick ratios indicate that National HealthCare Corporation maintains a strong liquidity position, while the fluctuating cash ratio may warrant further attention to ensure sufficient cash reserves to meet short-term obligations.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 24.72 | 20.67 | 20.71 | 16.36 | 16.78 |
Based on the data provided for National HealthCare Corporation's cash conversion cycle, we observe the following trend:
- As of December 31, 2020, the company's cash conversion cycle stood at 16.78 days.
- By December 31, 2021, the cash conversion cycle decreased slightly to 16.36 days, indicating a more efficient management of working capital.
- Subsequently, the cash conversion cycle increased to 20.71 days by December 31, 2022, and slightly reduced to 20.67 days by December 31, 2023.
- Finally, by December 31, 2024, the cash conversion cycle further increased to 24.72 days.
Overall, the trend indicates a variation in the efficiency of National HealthCare Corporation's cash conversion cycle over the years, with a slight improvement in 2021 followed by a gradual increase in the number of days it takes for the company to convert its investments in inventory and accounts receivable into cash. This upward trend may raise concerns regarding the company's liquidity and working capital management practices, suggesting a need for closer monitoring and potential adjustments to improve cash flow efficiency.