Northrop Grumman Corporation (NOC)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.01 | 1.15 | 1.08 | 1.30 | 1.60 |
| Quick ratio | 0.82 | 0.86 | 0.87 | 1.10 | 1.21 |
| Cash ratio | 0.31 | 0.26 | 0.22 | 0.37 | 0.51 |
The liquidity ratios of Northrop Grumman Corporation have shown a mixed trend over the years analyzed. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has decreased from 1.60 in 2020 to 1.01 in 2024. This indicates a slight decline in the company's liquidity position over the years, but it still remains above 1, suggesting that Northrop Grumman has sufficient current assets to meet its short-term liabilities.
The quick ratio, which provides a more stringent measure of liquidity by excluding inventories from current assets, also exhibited a decreasing trend from 1.21 in 2020 to 0.82 in 2024. This declining trend signifies a potential reduction in the company's ability to meet its short-term obligations without relying on selling inventory.
Moreover, the cash ratio, focusing solely on the availability of cash and cash equivalents to cover current liabilities, decreased from 0.51 in 2020 to 0.31 in 2024. This decrease indicates that Northrop Grumman's ability to settle its current obligations solely with cash has weakened over the years, which may warrant further monitoring.
Overall, the liquidity ratios of Northrop Grumman Corporation suggest a decreasing trend in liquidity position over the years, highlighting the importance of closely monitoring the company's ability to meet its short-term obligations in the future.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -39.26 | -22.85 | -67.99 | -34.75 | -15.79 |
The cash conversion cycle of Northrop Grumman Corporation has shown fluctuations over the five-year period analyzed. In December 2020, the company had a significantly negative cash conversion cycle of -15.79 days, indicating that it was efficient in converting its investments in inventory and accounts receivable into cash quickly.
However, by December 2022, the cash conversion cycle had increased to -67.99 days, suggesting that the company took longer to convert its investments in inventory and accounts receivable into cash during that period. This may have been influenced by changes in the company's operations, market conditions, or management of working capital.
In December 2023, the cash conversion cycle improved to -22.85 days, indicating a more efficient management of working capital compared to the previous year. By December 2024, the cycle decreased further to -39.26 days, which may suggest that the company found ways to streamline its operations and enhance its cash conversion efficiency.
Overall, despite fluctuations, Northrop Grumman Corporation has generally maintained a negative cash conversion cycle over the years, indicating efficiency in converting its resources into cash. Monitoring and managing the cash conversion cycle is crucial for the company to ensure optimal working capital management and cash flow efficiency in the future.