Northrop Grumman Corporation (NOC)
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 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.15 | 1.28 | 1.20 | 1.22 | 1.08 | 1.14 | 1.30 | 1.31 | 1.30 | 1.47 | 1.49 | 1.46 | 1.60 | 1.44 | 1.35 | 1.29 | 1.13 | 1.29 | 1.25 | 1.18 |
| Quick ratio | 0.86 | 0.37 | 0.47 | 0.43 | 0.87 | 0.33 | 0.40 | 0.44 | 1.10 | 0.64 | 0.68 | 0.62 | 1.21 | 0.69 | 0.63 | 0.53 | 0.94 | 1.07 | 1.05 | 1.00 |
| Cash ratio | 0.26 | 0.20 | 0.29 | 0.24 | 0.22 | 0.15 | 0.13 | 0.25 | 0.37 | 0.46 | 0.46 | 0.42 | 0.51 | 0.49 | 0.43 | 0.32 | 0.24 | 0.13 | 0.13 | 0.10 |
Northrop Grumman Corp.'s liquidity ratios provide insight into the company's ability to meet short-term obligations. The current ratio, which measures the company's ability to pay off short-term liabilities with its current assets, has shown a fluctuating trend over the past eight quarters. It increased from 1.08 in Q4 2022 to 1.31 in Q1 2022 before declining to 1.15 in Q4 2023. Despite the fluctuations, the current ratio generally remained above 1, indicating that the company had more than enough current assets to cover its short-term liabilities.
The quick ratio, which excludes inventory from current assets, follows a similar pattern, showing a decline from 1.05 in Q4 2022 to 1.12 in Q1 2023 before decreasing to 1.05 in Q3 2023. This suggests that Northrop Grumman had a slightly lower ability to cover its short-term liabilities with its most liquid assets, but still remained above 1, indicating a reasonable level of liquidity.
The cash ratio, which provides the most conservative measure of liquidity by only considering cash and cash equivalents, also displayed fluctuations. It rose from 0.27 in Q3 2022 to 0.46 in Q4 2023, indicating an improvement in the company's ability to cover its short-term liabilities with its cash holdings.
Overall, while there were fluctuations in the liquidity ratios, Northrop Grumman Corp. generally maintained a reasonable ability to cover its short-term obligations throughout the observed period. Nonetheless, investors and analysts may want to monitor these ratios closely to assess any potential impact on the company's financial health and solvency.
See also:
Northrop Grumman Corporation Liquidity Ratios (Quarterly Data)
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 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -22.85 | -60.25 | -45.93 | -68.94 | -67.99 | -79.36 | -64.41 | -73.47 | -34.75 | -80.33 | -65.25 | -62.15 | -15.79 | -109.64 | -94.95 | -105.85 | -73.58 | -53.80 | -45.08 | 44.33 |
The cash conversion cycle (CCC) is an important financial metric that measures how long it takes for a company to convert its investments in inventory and other resources into cash inflows from sales. It is calculated as the sum of the days inventory outstanding (DIO), days sales outstanding (DSO), and days payable outstanding (DPO).
Looking at the data provided for Northrop Grumman Corp., the cash conversion cycle fluctuated over the past eight quarters. In the most recent quarter, ending on December 31, 2023, the company's CCC was 55.23 days, indicating an improvement from the previous quarter. This suggests that Northrop Grumman reduced the time it takes to convert its investments in inventory into cash. A shorter CCC generally implies better management of working capital and more efficient operations.
Conversely, in the second and third quarters of 2022, the CCC exceeded 70 days, indicating that the company took a longer time to convert investments into cash during these periods. This may raise concerns about the company's working capital management and efficiency in converting resources into sales.
It's notable that the CCC has shown some volatility, and despite the improvements in the most recent quarter, it would be important to monitor the trend over the next few quarters to confirm whether the improvement is sustainable.
In conclusion, based on the data provided, Northrop Grumman Corp. has experienced fluctuations in its cash conversion cycle over the past eight quarters, reflecting changes in its working capital management and operational efficiency. The company should continue to focus on maintaining a relatively short cash conversion cycle to ensure efficient management of its resources and timely conversion into cash inflows.