Express Scripts Holding Co. (NASDAQ:ESRX)

The analysis of the quarterly liquidity ratios over the observed period reveals several notable trends and fluctuations in the short-term financial health of the company.

Current Ratio

The current ratio, indicative of the company's ability to cover short-term liabilities with current assets, exhibited moderate volatility throughout the timeline. Starting at 0.76 in March 2013, the ratio experienced a gradual decline, reaching its lowest point of 0.55 in June 2016. Thereafter, it showed a recovery trend, rising to a peak of 0.77 by September 2018. The variations suggest periods of tightened liquidity followed by gradual strengthening, though the ratio remained below 1.0, implying consistent reliance on liabilities exceeding current assets.

Quick Ratio

The quick ratio, a more stringent measure excluding inventory from current assets, mirrored the overall trend of the current ratio with fluctuations reflecting changes in liquid assets and short-term obligations. Beginning at 0.55 in March 2013, the ratio declined to its lowest value of 0.42 in March 2014, signaling relatively reduced liquid asset coverage at that time. Subsequently, the ratio rebounded, reaching 0.62 by September 2018. This oscillation suggests variability in the company's immediate liquidity but indicates improvement toward the end of the period.

Cash Ratio

The cash ratio, the most conservative liquidity metric measuring cash and cash equivalents against current liabilities, showed pronounced fluctuations. Initially at 0.17 in March 2013, it dropped as low as 0.03 in September 2015, pointing to minimal cash reserves relative to short-term debts. Following this low, the ratio generally trended upward, peaking twice at 0.20, once in December 2017 and again in September 2018. This pattern indicates that while cash reserves were sometimes notably low, the company improved its cash liquidity over time.

Overall, the liquidity ratios reflect periods of constrained liquidity balanced by phases of cautious reinforcement. The ratios consistently remained below or around 1.0, signifying that current liabilities frequently exceeded or nearly matched current assets, which may imply a strategic approach to working capital management or areas for potential liquidity risk.

Current assets

The current assets exhibit fluctuations over the observed periods from March 31, 2013, to September 30, 2018. Initially, there was a decline from approximately 8.7 billion to 8.3 billion US dollars between March and June 2013, followed by a recovery to over 9.2 billion by September 2013. Subsequent quarters show intermittent increases and decreases, with a general upward trend becoming more pronounced from late 2014. For instance, from December 2014 to December 2016, current assets increased from roughly 10.6 billion to about 12.4 billion US dollars. The period between early 2017 and the third quarter of 2018 is characterized by increased volatility, with notable peaks such as 14.35 billion in September 2018.

Current liabilities

Current liabilities have generally increased over the entire period. Starting at around 11.5 billion US dollars in March 2013, they declined slightly mid-year but then showed a persistent rise, reaching over 17 billion by the end of 2014. The upward trend continued with fluctuations, peaking around 19.1 billion in June 2016. After that, the liabilities demonstrated variability but remained mostly above 16 billion, reaching their highest point of approximately 18.7 billion in September 2018. The overall pattern suggests growing short-term obligations.

Current ratio

The current ratio values indicate a generally low liquidity position throughout the period, mostly remaining below 1.0, which signals that current assets have been insufficient to cover current liabilities consistently. The ratio starts at 0.76 in March 2013, decreases to a low of 0.55 in June 2016, reflecting worsening short-term financial health, and later improves modestly. In the intervals following this low, the ratio oscillates between 0.6 and 0.77, with the highest recorded value near the end of the data series in September 2018. This pattern implies persistent liquidity constraints, albeit with some improvement in the most recent quarters.

Total quick assets

The total quick assets exhibit fluctuations across the observed quarters. Initially, there is a decline from 6,284,100 thousand US dollars in March 2013 to 5,895,000 thousand in June 2013, followed by recovery in September 2013 to 6,834,700 thousand. This is succeeded by a downward trend towards December 2013 at 6,014,300 thousand. Subsequently, quick assets increase overall with intermittent dips, reaching 7,812,400 thousand by December 2014. In 2015, a general rising trend is evident, peaking at 9,907,600 thousand in December. The upward trajectory continues through 2016 and into early 2017, culminating at 10,139,300 thousand by December 2016. Afterward, values hover around 9.4 to 10.3 million, ending with a notable rise to 11,529,800 thousand in September 2018. The pattern suggests increased liquidity capacity over time with periodic volatility.

Current liabilities

Current liabilities show a steady upward trend during the entire period. From 11,524,100 thousand US dollars in March 2013, liabilities slightly decline and fluctuate mildly in the initial year, before a strong increase begins in 2014 peaking at 17,016,900 thousand by December 2014. Thereafter, the liabilities stabilize somewhat with minor fluctuations, remaining between approximately 15 and 17 billion dollars in 2015. Starting from 2016, current liabilities escalate again, reaching between 17 and 19 billion dollars throughout 2016 and 2017. By mid-2018, liabilities approach a peak of nearly 18.7 billion US dollars, indicating increasing short-term obligations over time, exerting pressure on liquidity.

Quick ratio

The quick ratio reflects the company's short-term liquidity position in relation to current liabilities. It starts at 0.55 in March 2013 and shows marginal increases and decreases during 2013, dipping to a low of 0.42 in March 2014. Through the latter half of 2014, the ratio remains relatively stable near 0.45 to 0.50. The year 2015 sees a gradual improvement in the quick ratio, increasing from about 0.45 to 0.58 by December. A noticeable improvement occurs by the end of 2016, with the ratio rising to 0.62, indicating enhanced ability to cover current liabilities with liquid assets. Housing fluctuations between 0.49 and 0.62 from 2016 to 2018, the quick ratio shows a modest strengthening trend despite increasing liabilities, finishing again at 0.62 in the third quarter of 2018.

Overall analysis

Overall, the data indicate that despite rising current liabilities over the years, the company has managed to improve its liquidity position moderately. The total quick assets generally trend upward, suggesting efforts to maintain or increase liquid resources. The quick ratio’s gradual improvement after 2014 demonstrates a positive tendency in meeting short-term obligations, although the ratio remains below 1, implying that quick assets do not fully cover current liabilities. Periodic fluctuations in quick assets and the quick ratio denote some volatility, but the long-term trend points towards enhanced liquidity management amid growing liabilities.

The analysis of financial data over the specified periods reveals distinct trends in liquidity and current liability management. The total cash assets exhibit significant fluctuations without a clear consistent direction. Initially, from early 2013 to the end of the year, cash assets varied moderately, ranging roughly between 1.3 billion and 2 billion US dollars. A notable spike occurred in the second quarter of 2014, where cash assets peaked at approximately 2.8 billion US dollars before dropping substantially in the subsequent quarter to under 1 billion. From late 2014 through 2015, cash balances remained generally lower, reaching a trough in the third quarter of 2015. A marked recovery in cash assets is observed starting in the fourth quarter of 2015 through the end of 2016, culminating in over 3 billion US dollars by the end of 2016. The levels then oscillate, but generally remain elevated through 2017 and into 2018, at values above 2.3 billion US dollars and reaching over 3.7 billion in the last recorded quarter.

In contrast, current liabilities consistently trend upwards across the entire timeframe. Starting at approximately 11.5 billion US dollars in early 2013, there is a steady increase with occasional plateauing, rising to nearly 17 billion by the end of 2014. Following a brief decline and fluctuations in 2015 and 2016, liabilities again demonstrate an upward incline, surpassing 18 billion US dollars toward the final quarters of the dataset in 2018. The sustained growth in current liabilities suggests increasing short-term obligations relative to the company’s earlier periods.

The cash ratio, representing the relationship between cash assets and current liabilities, reflects the interplay between these two variables with marked volatility. Early in the series, the ratio fluctuates moderately near the 0.15 mark but experiences a sharp decline to as low as 0.03 in the third quarter of 2015, aligning with the low cash position recorded then. Subsequently, there is a recovery in the cash ratio, peaking near 0.20 at the end of 2015 and again near the end of 2016, indicating improved liquidity during those periods. Despite the increasing current liabilities, the cash ratio’s rebounds imply episodic strengthening in liquidity positions, although the ratio remains below 0.25 generally, indicating relatively conservative cash reserves against short-term liabilities.

Overall, the data suggests that while current liabilities have steadily increased over the examined periods, cash assets show considerable fluctuation with phases of recovery and decline. The liquidity measured by the cash ratio indicates episodic improvements but generally signifies tight liquidity buffers relative to rising short-term obligations. This pattern warrants close monitoring to ensure ongoing operational flexibility and to mitigate potential liquidity risks.