Owens Corning Inc (OC)
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 | 1.69 | 2.16 | 2.07 | 1.86 | 1.69 | 1.77 | 1.87 | 1.72 | 1.82 | 1.86 | 1.91 | 1.87 | 1.81 | 1.95 | 1.87 | 1.63 | 1.55 | 1.69 | 1.69 | 1.83 |
| Quick ratio | 1.12 | 1.44 | 1.30 | 1.11 | 0.98 | 1.04 | 1.11 | 1.07 | 1.12 | 1.22 | 1.29 | 1.21 | 1.14 | 1.23 | 1.13 | 0.81 | 0.71 | 0.80 | 0.81 | 0.88 |
| Cash ratio | 0.69 | 0.72 | 0.53 | 0.39 | 0.52 | 0.39 | 0.43 | 0.37 | 0.57 | 0.55 | 0.54 | 0.41 | 0.50 | 0.48 | 0.42 | 0.16 | 0.13 | 0.03 | 0.07 | 0.06 |
Owens Corning's liquidity ratios, namely the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations.
The current ratio has shown some fluctuations over the past eight quarters, ranging from a low of 1.69 in Q4 2022 to a high of 2.16 in Q3 2023. A current ratio above 1 indicates that the company has more current assets than current liabilities, which implies a strong ability to pay off short-term obligations. However, a downward trend in the current ratio may indicate potential liquidity challenges in the future if not managed properly.
The quick ratio, a more stringent measure of liquidity, excludes inventory from current assets. Owens Corning's quick ratio has also fluctuated, with a low of 1.03 in Q4 2022 and a high of 1.49 in Q3 2023. Generally, a quick ratio above 1 suggests that the company can cover its short-term liabilities without relying on selling inventory, which is a positive sign for creditors and investors.
The cash ratio, the most conservative measure of liquidity, reveals the company's ability to cover its current liabilities using only its cash and cash equivalents. Owens Corning's cash ratio has varied from 0.44 in Q1 2022 to 0.78 in Q3 2023. A cash ratio below 1 implies that the company may need to rely on non-cash current assets or generate additional cash inflows to meet its short-term obligations.
In conclusion, while Owens Corning's liquidity ratios have exhibited fluctuations, the overall trend indicates that the company has maintained adequate liquidity levels to cover its short-term obligations, with room for improvement in certain periods. Monitoring these ratios regularly will be essential to assess the company's ongoing liquidity position and financial health.
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 | 36.32 | 54.67 | 59.71 | 59.15 | 35.74 | 50.35 | 49.98 | 47.18 | 39.93 | 112.27 | 116.22 | 119.64 | 46.93 | 115.23 | 118.31 | 118.33 | 53.59 | 117.33 | 120.67 | 128.51 |
The cash conversion cycle of Owens Corning has exhibited fluctuating trends over the past eight quarters. The cycle represents the time it takes for the company to convert its investments in inventory and accounts receivable back into cash. A shorter cash conversion cycle is generally considered favorable as it indicates that the company is efficiently managing its working capital.
In Q4 2023, Owens Corning's cash conversion cycle decreased to 36.29 days, marking a significant improvement from the previous quarter. This suggests that the company was able to convert its investments into cash more quickly, which could be a result of effective inventory management and efficient accounts receivable collection.
However, in Q3 and Q2 2023, the cash conversion cycle increased to 52.82 days and 57.60 days, respectively, indicating a potential slowdown in the working capital cycle. This could be attributed to increased inventory levels or delays in collecting accounts receivable, which may have tied up company funds for a longer period.
Comparing the latest data to the same quarter in the previous year, Owens Corning's cash conversion cycle in Q4 2023 was slightly higher than in Q4 2022 (35.37 days). While the company's current cycle remains relatively efficient, it is important to monitor future developments to ensure optimal management of working capital and cash flows.