ODP Corp (ODP)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.93 | 0.99 | 1.03 | 1.05 | 1.13 |
| Quick ratio | 0.11 | 0.23 | 0.22 | 0.23 | 0.35 |
| Cash ratio | 0.11 | 0.23 | 0.22 | 0.23 | 0.35 |
ODP Corp's liquidity ratios have shown a declining trend over the last five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, decreased from 1.13 in 2020 to 0.93 in 2024. This indicates that the company's current assets may be falling short in covering its current liabilities.
Similarly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, decreased from 0.35 in 2020 to 0.11 in 2024. This suggests that ODP Corp may have limited ability to meet its short-term obligations without relying on inventory.
The cash ratio, which indicates the company's ability to cover current liabilities solely with cash and cash equivalents, also decreased from 0.35 in 2020 to 0.11 in 2024. This decline in the cash ratio further highlights the potential liquidity challenges faced by ODP Corp.
Overall, the decreasing trend in these liquidity ratios indicates a possible strain on the company's liquidity position, which may warrant closer monitoring and management to ensure that ODP Corp can meet its short-term financial obligations effectively in the future.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 50.69 | 46.00 | 45.49 | 47.49 | 44.79 |
The cash conversion cycle of ODP Corp has shown a slight fluctuation over the past five years. As of December 31, 2020, the cash conversion cycle stood at 44.79 days and increased to 47.49 days by December 31, 2021. Subsequently, the cycle decreased to 45.49 days by December 31, 2022, before slightly rising to 46.00 days by December 31, 2023. However, by December 31, 2024, the cash conversion cycle experienced a notable increase to 50.69 days.
Overall, the trend indicates that ODP Corp is taking slightly longer to convert its investments in inventory into cash during the analyzed period. This may indicate potential inefficiencies in the company's inventory management or collection processes, which could impact its liquidity and working capital management. Further analysis of the company's operational and financial strategies may be warranted to address any underlying issues influencing the cash conversion cycle.