Neogen Corporation (NEOG)

Liquidity ratios

May 31, 2024 May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020
Current ratio 3.82 4.03 8.05 11.03 11.08
Quick ratio 1.11 1.69 9.22 12.81 12.81
Cash ratio 1.11 1.69 9.22 12.81 12.81

Neogen Corporation's liquidity ratios provide insights into the company's ability to meet its short-term obligations.

- The current ratio, reflecting current assets to current liabilities, shows a favorable trend from 11.08 in May 2020 to 3.82 in May 2024. Despite the decline, the current ratio remains above 1, indicating the company's ability to cover its current liabilities with current assets.

- The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also shows a decreasing trend from 12.81 in May 2020 to 1.11 in May 2024. This suggests a potential liquidity strain as the quick ratio falls significantly below 1 in the latest year.

- The cash ratio, which only considers cash and cash equivalents to current liabilities, follows a similar pattern as the quick ratio, decreasing from 12.81 in May 2020 to 1.11 in May 2024. This indicates a declining ability to cover short-term obligations using only cash and cash equivalents.

Overall, Neogen Corporation's liquidity ratios demonstrate a weakening liquidity position over the years, particularly indicated by the sharp decline in the quick ratio and cash ratio. Management should closely monitor liquidity levels and consider strategies to improve short-term liquidity to ensure financial stability.


Additional liquidity measure

May 31, 2024 May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020
Cash conversion cycle days 150.07 117.27 157.12 145.05 156.36

The cash conversion cycle of Neogen Corporation has shown fluctuations over the past five years.

As of May 31, 2020, the cash conversion cycle was 156.36 days, indicating that it took Neogen Corporation approximately 156 days to convert its investments in inventory and other resources into cash from sales.

By May 31, 2021, the cash conversion cycle had decreased to 145.05 days, suggesting an improvement in the company's efficiency in managing its working capital.

However, by May 31, 2022, the cash conversion cycle increased to 157.12 days, signaling a potential delay in converting the company's resources into cash.

The trend reversed positively by May 31, 2023, with a significant decrease in the cash conversion cycle to 117.27 days, indicating improved efficiency in working capital management.

As of May 31, 2024, the cash conversion cycle slightly increased to 150.07 days, which although higher than the previous year, is still showing better efficiency compared to some earlier periods.

Overall, Neogen Corporation's cash conversion cycle has exhibited fluctuations over the years, with varying effects on the company's management of working capital and conversion of resources into cash. This metric is important as it reflects the effectiveness of the company in managing its operating cycle and liquidity.