Cencora Inc. (COR)
Liquidity ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.88 | 0.91 | 0.94 | 0.98 | 0.95 |
| Quick ratio | 0.48 | 0.51 | 0.52 | 0.56 | 0.53 |
| Cash ratio | 0.05 | 0.08 | 0.07 | 0.14 | 0.11 |
The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has decreased from 0.94 in 2021 to 0.88 in 2023. This trend indicates a potential deterioration in the company's short-term liquidity position.
The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also shows a declining trend from 0.56 in 2021 to 0.52 in 2023. This suggests that the company may have difficulty meeting its short-term obligations without relying on inventory sales.
The cash ratio, which measures the company's ability to cover short-term liabilities with its cash and cash equivalents, has also shown a decline from 0.11 in 2021 to 0.09 in 2023. This indicates a decrease in the company's ability to cover immediate liabilities with its readily available cash.
Overall, the declining trend in all three liquidity ratios suggests a potential weakening of Cencora Inc.'s ability to meet its short-term financial obligations. Further investigation into the company's cash management and working capital practices may be warranted to address these liquidity concerns.
Additional liquidity measure
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -11.69 | -10.55 | -8.55 | -10.22 | -11.07 |
The cash conversion cycle (CCC) of Cencora Inc. has shown fluctuating trends over the past four years. As of September 30, 2023, the company's CCC stands at -11.69 days, indicating a negative cycle, which implies that the company is efficiently managing its working capital and able to convert its inventory into cash quickly. This is an improvement compared to the previous year's value of -10.55 days.
In contrast, the CCC was significantly lower in the preceding years, with values of -8.55 days in 2021 and a notably higher value of 36.67 days in 2020.
It's clear that the company's management of inventory, accounts receivable, and accounts payable has been erratic, with a negative CCC, indicating a relatively strong liquidity position in recent years. However, the significant increase in CCC in 2020 raises concerns about the company's liquidity management during that period. Overall, the recent improvements in the CCC demonstrate the company's efforts to optimize its working capital management, which can have positive implications for its financial health.