Norfolk Southern Corporation (NSC)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.90 | 1.24 | 0.76 | 0.86 | 1.07 |
| Quick ratio | 0.76 | 1.03 | 0.61 | 0.72 | 2.57 |
| Cash ratio | 0.46 | 0.60 | 0.17 | 0.33 | 2.18 |
The current ratio for Norfolk Southern Corporation has fluctuated over the years, starting at 1.07 in 2020, dropping to 0.76 in 2022, then increasing to 1.24 in 2023, and finally settling at 0.90 in 2024. These figures indicate the company's ability to cover its short-term liabilities with its current assets. The decreasing trend from 2020 to 2022 might raise concerns about liquidity, but the improvement in subsequent years shows some recovery.
The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, shows more volatility. It was high at 2.57 in 2020, dropped significantly to 0.61 in 2022, then recovered to 1.03 in 2023, before falling to 0.76 in 2024. This ratio suggests a mixed ability to cover short-term obligations without relying on inventory, as the values fluctuate.
Lastly, the cash ratio, representing the most stringent liquidity measure by only including cash and cash equivalents in current assets, shows similar fluctuations. Starting at a relatively strong 2.18 in 2020, it decreased sharply to 0.17 in 2022 and improved to 0.60 in 2023 before falling slightly to 0.46 in 2024. This ratio indicates Norfolk Southern Corporation's ability to cover short-term liabilities using only cash on hand.
In conclusion, while the current, quick, and cash ratios for Norfolk Southern Corporation have shown fluctuations over the years, the company's liquidity position seems to have improved in 2023 compared to 2022. However, the ratios in 2024 suggest a slight decline in liquidity relative to the previous year. Monitoring these ratios helps assess the company's ability to meet short-term obligations and manage liquidity effectively.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -84.57 | -87.06 | -57.08 | -91.57 | -61.83 |
The cash conversion cycle for Norfolk Southern Corporation has exhibited fluctuations over the years. As of December 31, 2020, the company's cash conversion cycle was at -61.83 days, indicating a negative cycle where the company was able to convert its investments in inventory and accounts receivable to cash quickly.
By December 31, 2021, the cash conversion cycle extended to -91.57 days, suggesting a further improvement in the efficiency of Norfolk Southern Corporation in managing its working capital. However, in the subsequent year, the cycle reduced significantly to -57.08 days by December 31, 2022, showcasing a more rapid conversion of investments to cash.
On December 31, 2023, the cash conversion cycle increased again to -87.06 days, albeit still negative, reflecting a potential delay in the conversion of working capital components to cash. Finally, by December 31, 2024, the cycle stood at -84.57 days, indicating a slight improvement from the previous year.
Overall, a negative cash conversion cycle suggests that Norfolk Southern Corporation has been efficient in managing its working capital and has been able to quickly convert investments in inventory and accounts receivable into cash, potentially enhancing its overall liquidity position. However, the fluctuations in the cycle over the years indicate the need for continued monitoring and management of working capital efficiency.