Old Dominion Freight Line Inc (ODFL)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.33 | 2.10 | 1.76 | 2.98 | 3.33 |
| Quick ratio | 1.18 | 1.93 | 1.59 | 2.83 | 3.18 |
| Cash ratio | 0.20 | 0.80 | 0.44 | 1.54 | 1.96 |
Old Dominion Freight Line Inc's liquidity position, as indicated by its key ratios, has fluctuated over the years. The current ratio, reflecting the company's ability to meet short-term obligations, decreased from 3.33 in 2020 to 1.33 in 2024. Although the ratio remained above 1 in each year, the declining trend may raise concerns about the company's liquidity management.
Similarly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, exhibited a downward trajectory from 3.18 in 2020 to 1.18 in 2024. This indicates a decreasing ability to cover short-term liabilities without relying on inventory liquidation.
The cash ratio, which highlights the proportion of current liabilities that can be covered by cash alone, also witnessed a decline from 1.96 in 2020 to 0.20 in 2024. This suggests that the company's cash position relative to its short-term obligations has weakened significantly over the years.
Overall, Old Dominion Freight Line Inc's liquidity ratios have shown a deteriorating trend, necessitating a closer examination of the company's cash management practices and working capital strategies to ensure its ability to meet near-term financial obligations.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 23.16 | 25.62 | 23.50 | 31.59 | 31.51 |
The cash conversion cycle of Old Dominion Freight Line Inc has shown a relatively stable trend over the past five years. In 2020, the cash conversion cycle was 31.51 days, which increased marginally to 31.59 days in 2021. However, the company managed to improve its efficiency in managing cash flow as seen by the decrease in the cash conversion cycle to 23.50 days in 2022. This improvement was sustained in 2023 with a further reduction to 25.62 days and a more notable decrease to 23.16 days in 2024.
A lower cash conversion cycle indicates that Old Dominion Freight Line Inc has been able to convert its investments in inventory and receivables into cash more rapidly. This can be indicative of effective inventory management and efficient collection of receivables, leading to a shorter operating cycle and enhanced liquidity for the company. The consistent focus on optimizing the cash conversion cycle reflects the company's commitment to financial efficiency and working capital management.