Northrop Grumman Corporation (NOC)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.15 | 1.08 | 1.30 | 1.60 | 1.13 |
| Quick ratio | 0.86 | 0.87 | 1.10 | 1.21 | 0.94 |
| Cash ratio | 0.26 | 0.22 | 0.37 | 0.51 | 0.24 |
The liquidity ratios of Northrop Grumman Corp. have fluctuated over the past five years, indicating changes in the company's short-term liquidity position.
The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, decreased from 1.60 in 2020 to 1.15 in 2023. This indicates a decline in the company's ability to cover its short-term liabilities with its current assets.
The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also showed a decreasing trend from 1.35 in 2020 to 1.05 in 2023. This suggests a potential decrease in the company's ability to meet its short-term obligations using its most liquid assets.
The cash ratio, which measures a company's ability to cover its current liabilities with its cash and cash equivalents, also demonstrated a downward trend, declining from 0.66 in 2020 to 0.46 in 2023. This indicates a reduction in the company's ability to meet its short-term obligations using only its cash and cash equivalents.
Overall, the declining trend in these liquidity ratios suggests a potential weakening of Northrop Grumman Corp.'s short-term liquidity position over the past five years. This may raise concerns about the company's ability to manage its short-term liabilities with its current assets and cash reserves.
See also:
Northrop Grumman Corporation Liquidity Ratios
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -22.85 | -67.99 | -34.75 | -15.79 | -73.58 |
The cash conversion cycle of Northrop Grumman Corp. has shown a gradual increase over the past five years, from 52.02 days at the end of 2019 to 55.23 days at the end of 2023. This indicates that the company is taking longer to convert its investments in inventory and other resources into cash. The increase in the cash conversion cycle suggests potential inefficiencies in managing inventory, collection of receivables, or payment of payables. It may be worth conducting a more detailed analysis to identify the specific areas causing this trend and to implement strategies to optimize the cash conversion cycle.