Service Corporation International (SCI)

Service Corp. International has shown varying levels of liquidity over the past five years, as evidenced by its current ratio, quick ratio, and cash ratio.

The current ratio, which measures the company's short-term liquidity and ability to meet its current obligations, has fluctuated between 0.45 and 0.67 from 2019 to 2023. A current ratio below 1 indicates potential difficulty in meeting short-term obligations with current assets alone. Service Corp. International's current ratio improved in 2023 compared to 2022, but it still remains below 1, which may raise concerns about the company's liquidity position.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Service Corp. International's quick ratio has ranged from 0.40 to 0.62 over the same five-year period. Similar to the current ratio, the quick ratio improved in 2023 compared to the previous year but remains below 1, indicating the company's reliance on inventory to meet short-term obligations.

The cash ratio, which is the most conservative measure of liquidity, focuses solely on the company's ability to meet its current liabilities with cash and cash equivalents. Service Corp. International's cash ratio has ranged from 0.27 to 0.39 from 2019 to 2023. While the cash ratio improved in 2023 compared to 2022, it remains below 1, suggesting that the company may not have sufficient cash on hand to cover its short-term liabilities.

Overall, Service Corp. International's liquidity ratios indicate that the company may face challenges in meeting its short-term obligations solely from its current assets or cash reserves. It is important for investors and stakeholders to monitor these liquidity ratios closely to assess the company's ability to manage its current financial commitments effectively.

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Additional liquidity measure

Service Corp. International has shown a consistent improvement in its cash conversion cycle over the past five years, indicating more efficient management of its working capital. The company's cash conversion cycle has decreased from -12.18 days in 2019 to -1.00 days in 2023.

A negative cash conversion cycle signifies that the company is able to collect cash from customers before paying its suppliers, resulting in a net inflow of cash. This could indicate effective credit management and efficient inventory turnover.

Overall, the trend towards a shorter cash conversion cycle suggests that Service Corp. International has been successful in optimizing its operations and enhancing its cash flow management.