Strategic Education Inc (STRA)

Looking at the liquidity ratios of Strategic Education Inc for the past five years, we can see the following trends:

1. Current Ratio:
The current ratio measures the company's ability to meet its short-term obligations with its current assets. Strategic Education Inc's current ratio has remained relatively stable over the years, ranging from 1.43 to 3.34. A ratio above 1 indicates that the company has more current assets than current liabilities, which is generally a positive sign. However, a decreasing trend from 2019 to 2020 followed by a slight increase in subsequent years may need a closer look to understand the underlying reasons.

2. Quick Ratio:
The quick ratio is a more stringent measure of liquidity as it excludes inventories from current assets. Strategic Education Inc's quick ratio has also shown consistency over the years, aligning closely with the current ratio figures. This suggests that the company has a stable proportion of highly liquid assets that can cover its short-term obligations.

3. Cash Ratio:
The cash ratio specifically focuses on the company's ability to meet short-term obligations using only its cash and cash equivalents. Strategic Education Inc's cash ratio has been on a declining trend, dropping from 3.01 in 2019 to 1.21 in 2023. While a high cash ratio indicates a strong ability to meet obligations without relying on other current assets, the decreasing trend may raise concerns about the company's cash management efficiency or liquidity position.

In conclusion, Strategic Education Inc has maintained adequate liquidity levels over the past five years as indicated by its current ratio and quick ratio figures. However, attention may be warranted towards monitoring the declining trend in the cash ratio to ensure the company's ability to meet short-term obligations relying solely on cash reserves. It would be beneficial for stakeholders to further investigate the reasons behind these trends to assess the company's overall financial health and liquidity management strategies.

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Additional liquidity measure

The cash conversion cycle of Strategic Education Inc has shown fluctuations over the past five years. In 2023, the cash conversion cycle increased to 24.52 days from 21.57 days in 2022, indicating a slower conversion of cash invested in inventory back to cash. Despite the increase, the company still managed to convert cash back relatively efficiently compared to 2021 where the cycle was 16.64 days.

The trend in the cash conversion cycle from 2020 to 2023 shows some volatility, with fluctuations in the efficiency of managing working capital components such as accounts receivable, accounts payable, and inventory turnover. Overall, the company has generally maintained a reasonable cash conversion cycle over the past five years, indicating effective management of working capital and efficient utilization of resources to generate cash flow. Further analysis in conjunction with other financial metrics would provide a more holistic view of the company's financial performance and operational efficiency.