Verisk Analytics Inc (VRSK)

Verisk Analytics Inc's liquidity ratios indicate the company's ability to meet its short-term obligations.

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its current assets.
- Verisk Analytics Inc's current ratio has decreased from 0.56 in 2020 to 0.49 in 2021, and further to 0.40 in 2022, which may indicate potential liquidity challenges.
- However, there was a significant improvement in the current ratio in 2023, reaching 1.05, suggesting a healthier financial position. It decreased slightly to 0.74 in 2024, which is still above 1, indicating the company can more comfortably cover its short-term obligations.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity as it excludes inventory from current assets.
- Verisk Analytics Inc's quick ratio follows a similar trend to the current ratio, showing a decrease from 0.16 in 2020 to 0.15 in 2021 and further to 0.05 in 2022.
- However, there was a notable improvement in 2023 with a quick ratio of 0.39, indicating a better ability to cover short-term liabilities. The ratio slightly decreased to 0.24 in 2024, still suggesting some liquidity challenges.

3. Cash Ratio:
- The cash ratio specifically focuses on the ability to cover short-term liabilities with cash and cash equivalents.
- Verisk Analytics Inc's cash ratio mirrored the trends seen in the current and quick ratios, indicating a decrease from 0.16 in 2020 to 0.15 in 2021 and further to 0.05 in 2022.
- However, a significant improvement was observed in 2023 with a cash ratio of 0.39, suggesting a stronger position in terms of liquidity. The ratio remained the same at 0.24 in 2024, indicating continued stability in covering short-term obligations with cash.

In conclusion, while Verisk Analytics Inc faced liquidity challenges in 2021 and 2022 based on the current, quick, and cash ratios, the significant improvement in 2023 reflects a better ability to meet short-term obligations. Continued monitoring of these ratios is essential to ensure sustained liquidity and financial stability.

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Additional liquidity measure

Verisk Analytics Inc's cash conversion cycle has shown significant variability over the past five years. In December 2020, the company had a cash conversion cycle of 29.82 days, indicating that it was able to convert its investments in inventory and accounts receivable into cash relatively quickly. However, by December 2022, the cash conversion cycle had increased substantially to 197.55 days, suggesting that the company was taking much longer to convert its assets into cash.

The dramatic decrease in the cash conversion cycle to 2.12 days by December 2023 and further to 0.00 days by December 2024 is noteworthy. These extremely low values indicate that the company was able to convert its investments into cash almost immediately, which could be an indication of efficient working capital management.

Overall, while the cash conversion cycle has exhibited significant fluctuations over the years, the decreasing trend observed from 2022 to 2024 suggests an improvement in the company's ability to efficiently manage its working capital and convert assets into cash promptly. This improvement could potentially lead to enhanced liquidity and financial performance for Verisk Analytics Inc.