Neogen Corporation (NEOG)
Liquidity ratios
| Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 3.82 | 3.54 | 4.23 | 4.03 | 5.18 | 4.22 | 9.07 | 8.05 | 9.28 | 9.75 | 12.00 | 11.03 | 12.09 | 12.97 | 11.99 | 11.08 | 13.16 | 12.89 | 11.71 | 11.75 |
| Quick ratio | 2.17 | 2.16 | 2.73 | 2.74 | 3.08 | 2.75 | 6.58 | 10.50 | 12.28 | 13.08 | 16.11 | 14.52 | 15.68 | 16.77 | 16.19 | 14.56 | 10.44 | 10.29 | 9.16 | 9.15 |
| Cash ratio | 1.07 | 1.30 | 1.73 | 1.69 | 1.71 | 1.81 | 5.19 | 9.22 | 10.87 | 11.61 | 14.39 | 12.81 | 13.78 | 14.97 | 14.51 | 12.81 | 8.38 | 8.08 | 7.20 | 6.99 |
Neogen Corporation's liquidity ratios have shown consistent strength over the periods analyzed. The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, has generally remained above 3, indicating a healthy liquidity position. The current ratio peaked at 13.16 on February 29, 2020, and has since fluctuated within a range of 3.54 to 5.18.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also demonstrated stability above 2 in most periods. This suggests that Neogen Corporation can meet its short-term obligations even without relying on inventory liquidation. The quick ratio reached its highest level at 16.77 on February 29, 2020.
Furthermore, the cash ratio, which provides the most conservative evaluation of liquidity by only considering cash and cash equivalents to cover current liabilities, has trended positively. With values consistently above 1, the company has shown a strong ability to honor immediate obligations using its available cash resources. The cash ratio peaked at 14.97 on May 31, 2021.
Overall, Neogen Corporation's liquidity ratios indicate a robust financial position, with ample resources to handle short-term obligations and unexpected needs. The company's ability to maintain high current, quick, and cash ratios reflects effective liquidity management practices.
Additional liquidity measure
| Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 71.11 | 49.78 | 47.95 | 60.24 | 80.20 | 75.76 | 109.17 | 103.58 | 111.13 | 106.81 | 115.67 | 120.64 | 122.27 | 112.18 | 116.41 | 115.95 | 114.40 | 114.07 | 113.65 | 113.29 |
Neogen Corporation's cash conversion cycle, which represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales, has shown fluctuation over the past several reporting periods.
The company's cash conversion cycle ranged between 47.95 days to 122.27 days over the last two years, indicating varying efficiency in managing its operating cycle. A lower cash conversion cycle suggests that the company is efficiently managing its working capital, while a higher cycle may signify inefficiencies in inventory management, accounts receivable collection, or accounts payable terms.
The trend analysis reveals that Neogen Corporation has generally experienced longer cash conversion cycles in the latter half of the periods examined. This trend suggests potential challenges in efficiently turning inventory into sales and collecting receivables promptly during those periods.
Overall, Neogen Corporation should focus on optimizing its supply chain management, inventory turnover, and accounts receivable processes to reduce its cash conversion cycle and improve its overall liquidity and working capital management.