Stericycle Inc (SRCL)

Stericycle Inc.'s liquidity ratios indicate the company's ability to meet its short-term obligations with its current assets. The current ratio has shown a fluctuating trend over the past five years, ranging from 0.79 to 0.94. This ratio measures the company's ability to pay off its current liabilities with its current assets. A current ratio below 1 may indicate potential liquidity issues, as seen in 2021 and 2020.

The quick ratio, also known as the acid-test ratio, mirrors the current ratio but excludes inventory from current assets. Similarly, the quick ratio for Stericycle Inc. has remained relatively stable over the years at 0.79 to 0.94. This ratio helps assess the company's ability to meet its short-term obligations without relying on selling inventory.

The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover its current liabilities with its cash and cash equivalents. Stericycle Inc.'s cash ratio has varied between 0.16 and 0.25 over the same period. A low cash ratio may raise concerns about the company's ability to meet its obligations in the short term.

Overall, while Stericycle Inc.'s liquidity ratios have exhibited some volatility, it is essential for stakeholders to closely monitor these ratios to ensure the company maintains sufficient liquidity to meet its short-term financial commitments.

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Additional liquidity measure

The cash conversion cycle of Stericycle Inc. has exhibited fluctuations over the past five years. In 2023, the company's cash conversion cycle increased significantly to 28.95 days, compared to 9.53 days in 2022 and 8.95 days in 2021. This indicates that in 2023, Stericycle took longer to convert its resources and investments into cash.

The considerable increase in the cash conversion cycle in 2023 could be a result of changes in the company's operating efficiency, inventory management, accounts receivable collection, and accounts payable practices. A longer cash conversion cycle may suggest potential issues such as slower collection of receivables, excessive inventory levels, or delayed payments to suppliers.

It is notable that the cash conversion cycle was relatively lower in 2022 and 2021, indicating that Stericycle was more efficient in managing its working capital and turning its investments into cash during those years. The fluctuation in the cash conversion cycle over the years emphasizes the importance of closely monitoring and managing the company's working capital to optimize cash flow and operational efficiency.