Name: Current Ratio

Definition: The current ratio evaluates a company’s capacity to cover its short-term liabilities with its short-term assets. It includes cash, cash equivalents, accounts receivable, inventory, and other assets expected to be liquidated or used within one year. A higher current ratio indicates that the company holds sufficient liquid assets to meet near-term obligations, enhancing its short-term financial stability. However, excessively high values may suggest inefficiencies in capital utilization, such as excess inventory or idle cash that could otherwise be invested for better returns. Conversely, a very low current ratio may raise concerns over liquidity risk, especially if the company faces unexpected cash demands or revenue shortfalls. The interpretation of an optimal current ratio depends largely on industry norms. Asset-heavy industries like manufacturing may maintain higher current ratios due to inventory cycles, while service-oriented or tech companies may operate efficiently with relatively lower ratios.

Interpretation:
• In '2021', LFMDP's current ratio was 1.97, reflecting the firm's overall short-term liquidity position. Industry average for Medical/Nursing Services in '2021' stood at 2.32.
• In '2022', LFMDP's current ratio was 0.36, reflecting the firm's overall short-term liquidity position. The decline from '2021' may indicate some operational or financial challenges. Industry average for Medical/Nursing Services in '2022' stood at 1.76. Industry average declined by 0.55 from previous year.
• In '2023', LFMDP's current ratio was 1.22, reflecting the firm's overall short-term liquidity position. The increase since '2022' reflects strengthening financial performance. Industry average for Medical/Nursing Services in '2023' stood at 1.92. Industry average increased by 0.16 compared to previous year.
• In '2024', LFMDP's current ratio was 0.81, reflecting the firm's overall short-term liquidity position. The decline from '2023' may indicate some operational or financial challenges. Industry average for Medical/Nursing Services in '2024' stood at 1.71. Industry average declined by 0.21 from previous year.
Overall, LFMDP's current ratio has been volatile but showed a downward trend over the past 4 years.

Formula: Current Ratio = Current Assets / Current Liabilities

Good Range: Typically between 1.2 and 2.0 for healthy businesses.