Option Care Health Inc (OPCH)

Option Care Health Inc's liquidity ratios have shown improvement over the years, indicating a strengthening financial position in terms of its ability to meet short-term obligations.

- The current ratio, which measures the company's ability to cover its current liabilities with its current assets, has increased from 1.51 in 2020 to 1.70 in 2024. This suggests that the company has sufficient current assets to meet its current liabilities, with a slight increase in the ratio over time.

- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventories from current assets. Option Care Health Inc's quick ratio has shown a notable increase from 0.23 in 2020 to 0.53 in 2024. This indicates that the company has a stronger ability to meet its short-term obligations without relying on inventory.

- The cash ratio, which is the most conservative liquidity measure as it only includes cash and cash equivalents in the numerator, has also displayed a similar positive trend. The ratio has improved from 0.23 in 2020 to 0.53 in 2024, emphasizing that Option Care Health Inc has a sufficient amount of cash to cover its current liabilities.

Overall, the increasing trend in all three liquidity ratios suggests that Option Care Health Inc has been managing its liquidity effectively, maintaining a healthy financial position with ample resources to fulfill its short-term obligations.

---

Additional liquidity measure

Option Care Health Inc's cash conversion cycle has been gradually increasing over the years, indicating a lengthening period between the company's cash outflows and inflows.

- In December 31, 2020, the cash conversion cycle was 24.63 days.
- By December 31, 2021, the cycle had slightly increased to 25.13 days.
- Moving to December 31, 2022, the cycle further extended to 26.60 days.
- There was a more significant increase in the cash conversion cycle by December 31, 2023, where it reached 30.11 days.
- The cycle continued to grow, reaching 35.55 days by December 31, 2024.

This trend suggests that Option Care Health Inc may be facing challenges in managing its working capital efficiently. The company needs to closely monitor its cash conversion cycle to ensure that it does not tie up excess funds in inventory and accounts receivable, which could impact its liquidity and overall financial health.