Republic Services Inc (RSG)

Republic Services, Inc.'s liquidity ratios show a mix of strengths and areas needing improvement over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has fluctuated but generally remained below 1. This indicates that the company may have difficulty covering its current liabilities with its current assets alone.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, follows a similar trend to the current ratio and also remains below 1 over the years. This suggests that Republic Services, Inc. may struggle to cover its short-term obligations without relying on selling inventory.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents as a source of liquidity, has varied but has generally remained low throughout the years. This indicates that the company holds minimal cash compared to its current liabilities, potentially limiting its ability to cover immediate obligations without relying on other sources of liquidity.

Overall, Republic Services, Inc. demonstrates liquidity challenges as indicated by the consistently low current, quick, and cash ratios. The company may need to focus on improving its liquidity position by better managing its current assets and liabilities to ensure it can meet its short-term financial obligations effectively.

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Additional liquidity measure

The cash conversion cycle of Republic Services Inc has shown a consistent improvement over the last five years. The company managed to significantly reduce its cash conversion cycle from 1.53 days in 2019 to -5.38 days in 2023. This indicates that Republic Services Inc is able to convert its investments in raw materials and production into cash more efficiently and swiftly.

The negative values for the cash conversion cycle suggest that the company is able to collect cash from customers before having to pay its suppliers, which is a favorable position as it indicates effective working capital management. The company has managed to optimize its operating cycle by reducing the time it takes to collect receivables and extend payables.

Overall, the trend of decreasing cash conversion cycle indicates that Republic Services Inc has been successful in improving its liquidity and efficiency in managing its cash flow over the years. This ability to convert operating assets and liabilities into cash quickly is a positive sign of the company's operational effectiveness.