Cencora Inc. (COR)

The liquidity ratios of Cencora Inc. indicate the company's ability to meet its short-term obligations.

The current ratio has been decreasing over the past five years, from 0.98 in 2020 to 0.88 in 2024. This suggests that the company may be facing challenges in maintaining its short-term liquidity, as the current assets are not sufficient to cover the current liabilities.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, has also shown a decreasing trend from 0.56 in 2020 to 0.50 in 2024. This indicates that Cencora Inc. may have difficulties in meeting its short-term obligations without relying on inventory.

The cash ratio, which is the most conservative liquidity ratio, has also shown a declining trend from 0.14 in 2020 to 0.06 in 2024. This suggests that the company's cash and cash equivalents may not be sufficient to cover its immediate liabilities.

Overall, the decreasing trends in all three liquidity ratios over the past five years indicate that Cencora Inc. may be facing liquidity challenges and may need to consider strategies to improve its short-term financial health.

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Additional liquidity measure

The cash conversion cycle of Cencora Inc. has shown some fluctuations over the past five years. The cycle represents the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

In the most recent fiscal year ending on September 30, 2024, the cash conversion cycle improved slightly to -11.30 days compared to the previous year. This indicates that the company was able to manage its working capital more efficiently, resulting in a shorter period for converting investments into cash.

Looking back over the five-year period, there have been variations in the cash conversion cycle. In FY 2023 and FY 2020, the cycle was more negative, indicating quicker conversion of investments into cash compared to FY 2021 and FY 2022. Notably, there was a significant improvement in FY 2021 followed by a slight deterioration in FY 2022.

Overall, a negative cash conversion cycle suggests that Cencora Inc. has been effective in managing its working capital and generating cash flows from its operations. However, the fluctuations in the cycle over the years may warrant further investigation to identify the underlying factors driving these changes and to ensure sustainable financial performance in the future.