GXO Logistics Inc (GXO)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.98 | 1.01 | 0.96 | 0.95 | 0.96 | 0.99 | 0.95 | 0.96 | 0.90 | 0.87 | 0.98 |
| Quick ratio | 0.85 | 0.88 | 0.84 | 0.84 | 0.85 | 0.85 | 0.82 | 0.85 | 0.99 | 0.74 | 2.22 |
| Cash ratio | 0.18 | 0.19 | 0.13 | 0.18 | 0.20 | 0.19 | 0.16 | 0.15 | 0.14 | 0.12 | 1.57 |
Based on the liquidity ratios calculated for GXO Logistics Inc over the past five quarters, we can draw the following conclusions:
1. Current Ratio: The current ratio measures GXO's ability to cover its short-term liabilities with its current assets. The trend shows that the current ratio has been relatively stable around 0.96 to 1.01 in the last five quarters. Though the ratio dipped slightly in Q2 2023, overall, GXO's current assets have been sufficient to cover its current liabilities.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Similar to the current ratio, the quick ratio has also been consistent around 0.95 to 1.01 over the past five quarters, indicating GXO's ability to meet its short-term obligations even without relying on inventory.
3. Cash Ratio: The cash ratio reflects GXO's ability to cover its current liabilities with its most liquid asset, cash. While the cash ratio fluctuated slightly from 0.24 to 0.33 over the past five quarters, it has generally remained relatively low compared to the current and quick ratios. This suggests that GXO relies more on other liquid assets besides cash to meet its short-term obligations.
Overall, based on the liquidity ratios analysis, GXO Logistics Inc appears to have maintained a stable liquidity position over the past five quarters, with a sufficient level of current assets to cover its short-term liabilities. However, the company may want to monitor its cash reserves to ensure it has enough liquidity to meet unexpected needs or capitalize on potential opportunities.
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | ||
|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 37.56 | 39.13 | 43.58 | 36.84 | 36.95 | 38.32 | 40.99 | 41.34 |
The cash conversion cycle of GXO Logistics Inc has shown slight fluctuations over the past five quarters. In Q4 2023, the company's cash conversion cycle increased to 65.44 days from 62.79 days in the previous quarter. This uptick suggests a slight delay in the company's ability to convert its investments in inventory and other resources into cash.
Comparing the latest quarter to the same period one year ago, there has been a moderate improvement, as the cash conversion cycle decreased from 66.85 days in Q4 2022 to 65.44 days in Q4 2023. This indicates that GXO Logistics Inc has been more efficient in managing its working capital and cash flow over the past year.
Overall, while there have been some fluctuations in the cash conversion cycle, GXO Logistics Inc appears to have made progress in optimizing its working capital management, leading to a more efficient conversion of its assets into cash. Continued monitoring of this metric will be important to ensure sustained financial health and operational efficiency for the company.