Verra Mobility Corp (VRRM)

Based on the provided data, Verra Mobility Corp's liquidity ratios show a declining trend over the years.

1. Current Ratio: The company's current ratio has decreased from 5.12 in 2020 to 1.97 in 2024. While a current ratio above 1 indicates the company has more current assets than current liabilities, the decreasing trend may suggest a potential risk in meeting short-term obligations.

2. Quick Ratio: Verra Mobility Corp's quick ratio has also shown a decline, from 1.93 in 2020 to 0.39 in 2024. This ratio measures the company's ability to meet short-term liabilities with its most liquid assets. The decreasing trend indicates a reduction in the company's ability to cover immediate obligations without relying on inventory.

3. Cash Ratio: The cash ratio, which is the strictest measure of liquidity, has followed a similar downward trend, from 1.93 in 2020 to 0.39 in 2024. This suggests a decreasing ability to cover short-term liabilities solely with cash on hand.

Overall, the declining trend in all three liquidity ratios for Verra Mobility Corp indicates a potential deterioration in the company's short-term financial health and ability to meet its immediate financial obligations. Further monitoring and analysis of the company's liquidity position may be warranted to assess and address any liquidity risks.

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Additional liquidity measure

The cash conversion cycle of Verra Mobility Corp has shown variations over the years. It decreased significantly from 261.83 days as of December 31, 2020, to 125.59 days as of December 31, 2021, indicating an improvement in the company's efficiency in managing its working capital. However, in the following years, there was an increase in the cash conversion cycle to 149.11 days as of December 31, 2022, 150.88 days as of December 31, 2023, and 297.99 days as of December 31, 2024.

The increase in the cash conversion cycle in the years after 2021 suggests that Verra Mobility Corp may have experienced challenges in managing its cash flow and working capital effectively during those periods. The company took longer to convert its investments in inventory and receivables into cash, which could indicate potential liquidity issues or inefficiencies in its operations.

Overall, the fluctuating trend in the cash conversion cycle of Verra Mobility Corp highlights the importance of closely monitoring working capital management practices to ensure optimal cash flow and operational efficiency.