Insperity Inc (NSP)

Insperity Inc's liquidity ratios, including the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has been relatively stable over the past five years, ranging from 1.10 to 1.19. This indicates that Insperity Inc generally has sufficient current assets to cover its current liabilities.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Insperity Inc's quick ratio has also been relatively stable, ranging from 1.06 to 1.14 over the same period. This suggests that the company has a solid ability to meet its short-term obligations without relying on inventory, which may not be as easily converted to cash.

The cash ratio, which specifically assesses the company's ability to cover its current liabilities with its available cash and cash equivalents, has shown some fluctuations over the years. However, it has generally remained below 1, indicating that Insperity Inc may not have enough cash on hand to cover its short-term obligations entirely.

Overall, while Insperity Inc's liquidity ratios demonstrate a consistent ability to meet its short-term obligations, the cash ratio suggests a potential limitation in terms of available cash reserves. It may be beneficial for the company to closely monitor its cash position and consider strategies to improve liquidity in the future.

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Additional liquidity measure

Insperity Inc's cash conversion cycle has shown a fluctuating trend over the past five years. The company's cash conversion cycle was 39.05 days at the end of 2023, slightly higher than the previous year's 38.28 days and 39.71 days in 2019. This indicates that the company took longer to convert its investments in inventory and accounts receivable into cash during 2023 compared to the prior year, but improvement from 2019.

In 2020, Insperity Inc experienced a lower cash conversion cycle of 33.44 days, suggesting more efficient management of working capital and faster conversion of inventory and receivables into cash. However, this trend reversed in 2021 and 2022, with the cycle increasing to 38.59 and 38.28 days, respectively.

Overall, a lower cash conversion cycle is typically preferable as it indicates that the company is able to generate cash quickly from its operations. However, fluctuations in the cycle over the years may signal changes in the company's efficiency in managing its working capital and liquidity. Monitoring and further analysis of the components affecting the cash conversion cycle, such as accounts receivable, inventory turnover, and accounts payable, could provide insights into areas for operational improvement or potential financial risks.