GXO Logistics Inc (GXO)

Based on the provided data, let's analyze the liquidity ratios of GXO Logistics Inc:

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term obligations with its current assets. A ratio above 1 indicates the company has more current assets than current liabilities.
- GXO Logistics Inc's current ratio fluctuated over the years: from 1.06 in 2020 to 0.83 in 2024, with values below 1 in the latter years.
- A decreasing trend in the current ratio might indicate potential liquidity challenges as the company's ability to pay its short-term obligations weakened.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets.
- GXO Logistics Inc's quick ratio ranged from 0.14 to 0.20 over the years, indicating a relatively low ability to meet short-term obligations with its most liquid assets.
- The quick ratio below 1 in all years implies that the company may have difficulty meeting its immediate obligations without relying on inventory.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, focusing solely on the company's ability to cover its current liabilities with cash and cash equivalents.
- GXO Logistics Inc's cash ratio also ranged from 0.13 to 0.20, suggesting that the company may have limited cash reserves relative to its current liabilities.
- A cash ratio below 1 indicates the company may need to rely on sources other than cash to meet its short-term obligations.

In summary, based on the liquidity ratios provided, GXO Logistics Inc experienced fluctuations in its liquidity position over the years, with decreasing trends in the current ratio and relatively low quick and cash ratios. This indicates a potential liquidity risk for the company, highlighting the importance of monitoring and managing its short-term financial obligations effectively.

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Additional liquidity measure

Based on the provided data, GXO Logistics Inc has consistently maintained a cash conversion cycle of 0.00 days throughout the years 2020 to 2024. This indicates that the company is efficiently managing its cash flows in the operations cycle, from the initial investment in inventory to the final collection of cash from customers. A cash conversion cycle of zero days implies that GXO Logistics is effectively managing its working capital, minimizing the time it takes to convert inventory and receivables into cash, which is a positive indicator of the firm's liquidity and operational efficiency.