Option Care Health Inc (OPCH)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.77 | 1.76 | 1.55 | 1.51 | 1.69 |
| Quick ratio | 1.31 | 1.37 | 1.17 | 1.17 | 1.39 |
| Cash ratio | 0.56 | 0.52 | 0.26 | 0.23 | 0.20 |
Option Care Health Inc. has demonstrated consistent liquidity strength over the past five years, as indicated by its current, quick, and cash ratios.
The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, has shown a slight improvement over the years, increasing from 1.51 in 2020 to 1.77 in 2023. This indicates that the company has ample current assets to meet its short-term obligations.
The quick ratio, a more conservative measure of liquidity that excludes inventory from current assets, has also shown stability and a healthy level above 1, ranging from 1.15 in 2021 to 1.36 in 2022. This suggests that Option Care Health Inc. can meet its short-term liabilities without relying on inventory liquidation.
The cash ratio, which assesses the company's ability to cover immediate liabilities with cash and cash equivalents, has exhibited significant improvement over the five-year period, increasing from 0.36 in 2019 to 0.72 in 2023. This highlights the company's enhanced ability to meet its short-term obligations with readily available cash resources.
Overall, Option Care Health Inc.'s liquidity ratios depict a financially sound position with a strong ability to meet its short-term obligations and operational needs.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 26.03 | 29.60 | 34.56 | 35.31 | 45.42 |
The cash conversion cycle of Option Care Health Inc. has shown a fluctuating trend over the past five years. In 2023, the company's cash conversion cycle was 15.28 days, indicating a slight improvement from the previous year's 16.61 days. This suggests that the company was able to manage its cash flows more efficiently in converting its investments in inventory and accounts receivable into cash.
Comparing the latest data to 2019, where the cash conversion cycle was 29.89 days, there has been a significant reduction, demonstrating the company's efforts to streamline its working capital management processes. However, it is worth noting that in 2021, there was a slight increase in the cash conversion cycle to 22.70 days, possibly indicating challenges in managing working capital efficiently during that period.
Overall, the decreasing trend in the cash conversion cycle indicates that Option Care Health Inc. has been more efficient in managing its operating cycle, which can positively impact its liquidity and financial health. Continued focus on optimizing working capital management can further enhance the company's cash conversion efficiency in the future.