Owens Corning Inc (OC)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.69 | 1.69 | 1.82 | 1.81 | 1.55 |
| Quick ratio | 1.12 | 0.98 | 1.12 | 1.14 | 0.71 |
| Cash ratio | 0.69 | 0.52 | 0.57 | 0.50 | 0.13 |
Owens Corning's liquidity ratios indicate the company's ability to meet its short-term obligations with its current assets. The current ratio has been relatively stable over the past five years, hovering around 1.5 to 1.8, which suggests that Owens Corning has sufficient current assets to cover its current liabilities.
The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, shows some fluctuations over the years. Although the quick ratio increased in 2023 compared to 2022, it remains above 1, indicating that the company can cover its current liabilities with its most liquid assets.
The cash ratio measures the company's ability to cover its current liabilities with cash and cash equivalents alone. Owens Corning's cash ratio has shown improvement over the years, with a notable increase in 2023. This indicates that the company has a higher proportion of cash and cash equivalents relative to its current liabilities.
Overall, Owens Corning's liquidity ratios suggest that the company has maintained a healthy liquidity position over the years, with adequate current assets to meet its short-term obligations. Additionally, the increasing cash ratio indicates that the company may have improved its liquidity in terms of cash holdings, which can provide a buffer in times of financial uncertainty.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 36.62 | 35.93 | 40.02 | 47.29 | 53.59 |
The cash conversion cycle of Owens Corning has shown a decreasing trend over the past five years, indicating improved efficiency in managing its cash flow and working capital. The company's cash conversion cycle decreased from 53.59 days in 2019 to 36.29 days in 2023. This improvement suggests that Owens Corning has been able to reduce the time it takes to convert inventory and receivables into cash, which is a positive sign of effective working capital management.
A declining cash conversion cycle is generally seen as favorable as it indicates that the company is able to generate cash more quickly from its operations. This improvement can be attributed to better inventory management, faster collection of receivables, and effective payment of payables. Overall, the decreasing trend in Owens Corning's cash conversion cycle reflects better liquidity and operational efficiency in recent years.