Sotera Health Co (SHC)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 2.42 | 2.59 | 2.73 | 1.54 | 0.81 | 3.00 | 2.81 | 2.58 | 2.15 | 2.52 | 2.70 | 2.38 |
| Quick ratio | 1.97 | 1.97 | 2.09 | 1.32 | 0.67 | 2.19 | 1.99 | 1.72 | 1.40 | 1.77 | 2.10 | 1.73 |
| Cash ratio | 1.29 | 1.22 | 1.31 | 1.08 | 0.50 | 1.18 | 0.99 | 0.84 | 0.66 | 0.86 | 1.11 | 0.85 |
Sotera Health Co's liquidity ratios show a fluctuating trend over the past eight quarters.
The current ratio, which measures the company's ability to meet short-term obligations with its current assets, improved steadily from Q1 2023 to Q3 2023, indicating a healthier liquidity position during this period. However, there was a significant decline in Q4 2023 compared to the previous quarter, raising concerns about the company's short-term liquidity in the most recent period.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, followed a similar pattern as the current ratio. It demonstrated an increasing trend from Q1 2023 to Q3 2023, suggesting an improving ability to cover immediate liabilities. Nevertheless, the quick ratio also experienced a notable decrease in Q4 2023, indicating potential difficulties in meeting short-term obligations without relying on inventory.
The cash ratio, which focuses solely on the company's ability to cover short-term liabilities with cash and cash equivalents, exhibited a more stable trend compared to the other ratios. Although there were fluctuations in the cash ratio over the quarters, it generally maintained above 1, indicating a sufficient level of cash reserves to meet immediate obligations.
Overall, Sotera Health Co's liquidity ratios reflect some improvements in liquidity over the past year, particularly in the first three quarters of 2023. However, the significant decline in the current and quick ratios in Q4 2023 suggests a potential liquidity strain that requires further monitoring and management attention.
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 37.30 | 40.00 | 47.48 | 39.98 | 19.21 | 32.82 | 31.97 | 39.81 | 30.00 |
The cash conversion cycle of Sotera Health Co has shown fluctuations over the past eight quarters. In Q4 2023, the cash conversion cycle was 35.80 days, which was lower compared to Q3 2023 at 37.91 days. However, the cycle has been higher in recent quarters compared to previous periods, indicating potential challenges in efficiently managing cash flow from operations.
The longest cash conversion cycle was observed in Q2 2023 at 45.88 days, signifying a delay in converting resources into cash. This trend continued from Q1 2023, which had a cycle of 37.86 days. Compared to these quarters, Q4 2022 showed a significantly shorter cycle of 17.26 days, indicating improved efficiency in managing working capital.
Throughout the analyzed quarters, the cash conversion cycle has been volatile, with peaks and troughs in various periods. It is essential for Sotera Health Co to closely monitor and manage its cash conversion cycle to ensure efficient utilization of resources and optimize cash flow operations for sustainable growth and financial stability.