Verra Mobility Corp (VRRM)

The liquidity ratios of Verra Mobility Corp, namely the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term financial obligations.

The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Verra Mobility Corp's current ratio has remained relatively stable over the past five years, ranging from 1.94 to 2.05. A current ratio above 1 indicates that the company has more current assets than current liabilities, with a higher ratio suggesting stronger liquidity. Verra Mobility Corp's current ratio indicates that the company has a sufficient buffer to meet its short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Verra Mobility Corp's quick ratio has also shown stability over the years, ranging from 1.82 to 1.95. Similar to the current ratio, a quick ratio above 1 indicates that the company can cover its short-term liabilities with its most liquid assets. Verra Mobility Corp's consistent quick ratio suggests a strong ability to meet short-term obligations without relying on inventory.

The cash ratio specifically focuses on the company's ability to cover its current liabilities with cash and cash equivalents. Verra Mobility Corp's cash ratio has fluctuated over the years, ranging from 0.78 to 0.85. A cash ratio above 1 indicates that the company has sufficient cash to meet its short-term obligations. While Verra Mobility Corp's cash ratio is below 1, the trend indicates that the company has maintained a reasonable level of cash reserves relative to its short-term liabilities.

Overall, based on the liquidity ratios analysis, Verra Mobility Corp appears to have maintained solid liquidity levels over the past five years, with the current, quick, and cash ratios consistently indicating the company's ability to meet its short-term financial commitments.

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Additional liquidity measure

The cash conversion cycle for Verra Mobility Corp has exhibited fluctuations over the past five years. The cycle was -405.55 days at the end of 2023, indicating that the company takes over a year to convert its investments in raw materials into cash from sales. This represents an improvement from the previous year where the cycle was -371.95 days.

Despite the improvement in 2023, the company's cash conversion cycle remains negative, indicating efficient management in converting inventory to receivables and ultimately into cash. The negative cash conversion cycle implies that Verra Mobility Corp is able to collect cash from customers more quickly than it pays its suppliers, leading to a net positive impact on cash flow.

In comparison to the previous years, the company's cash conversion cycle had shown a significant improvement from -859.98 days in 2019 to -206.00 days in 2020. However, in 2021, the cycle became less efficient at -449.98 days and then improved slightly in 2022 to -371.95 days before reaching the -405.55 days figure in 2023.

Overall, Verra Mobility Corp has been able to manage its cash conversion cycle effectively over the years, reflecting its ability to operate efficiently by optimizing the cash flow from its operating cycle.