Organon & Co (OGN)

Based on the provided data, the Current Ratio of Organon & Co has shown a declining trend from 2.86 in December 2020 to 1.60 in December 2024. This indicates a potential reduction in the company's ability to cover its short-term obligations with its current assets over the years.

Furthermore, the Quick Ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also decreased from 0.42 in December 2020 to 0.25 in December 2024. This suggests a diminishing ability to meet immediate short-term liabilities without relying on inventory.

In terms of the Cash Ratio, which indicates the company's ability to cover current liabilities with its cash and cash equivalents, Organon & Co maintained a consistent level from December 2020 to December 2024, ranging between 0.24 and 0.42. While the company seems to have a stable cash position relative to its current liabilities, the decline in the broader liquidity ratios raises concerns about its overall liquidity position.

Overall, the liquidity ratios of Organon & Co suggest a weakening liquidity position over the years, as indicated by the declining trend in both the Current Ratio and the Quick Ratio. It may be important for the company to closely monitor and manage its liquidity to ensure it can meet its short-term obligations effectively.

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Additional liquidity measure

The cash conversion cycle of Organon & Co has shown an upward trend over the past five years. Specifically, it increased from 99.57 days at December 31, 2020 to 179.38 days at December 31, 2024. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory back into cash.

A longer cash conversion cycle indicates that the company is taking more time to sell its inventory and collect payments from customers, which can tie up working capital and potentially indicate inefficiencies in the company's operations. This could be a concern for Organon & Co, as the trend suggests a deterioration in its working capital management over the years.

It is essential for Organon & Co to closely monitor and manage its cash conversion cycle to ensure efficient use of its resources and maintain healthy liquidity levels. Further analysis and potential operational improvements may be necessary to reduce the length of the cash conversion cycle and optimize working capital efficiency.