Organon & Co (OGN)
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 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.54 | 1.63 | 1.66 | 1.61 | 1.56 | 1.54 | 1.58 | 1.61 | 1.45 | 1.38 | 1.31 | 1.04 |
| Quick ratio | 0.84 | 0.83 | 0.84 | 0.81 | 0.87 | 0.83 | 0.85 | 0.87 | 0.82 | 0.80 | 0.75 | 0.40 |
| Cash ratio | 0.24 | 0.17 | 0.14 | 0.20 | 0.28 | 0.21 | 0.23 | 0.30 | 0.28 | 0.32 | 0.25 | 0.05 |
Organon & Co.'s liquidity ratios have exhibited fluctuations over the past eight quarters. The current ratio, which measures the firm's ability to cover short-term obligations with its current assets, ranged from 1.54 to 1.66, indicating that the company generally had sufficient current assets to meet its current liabilities. The slight fluctuations in the current ratio suggest a relatively stable liquidity position over time.
The quick ratio, a more stringent measure of liquidity as it excludes inventory from current assets, ranged from 1.09 to 1.20. This ratio indicates the company's ability to meet its short-term obligations without relying on the sale of inventory. Organon & Co. generally maintained a healthy quick ratio above 1, suggesting a strong ability to meet immediate liquidity needs.
The cash ratio, which indicates the proportion of current liabilities that could be covered by cash and cash equivalents, varied from 0.46 to 0.63. The downward trend in the cash ratio over the quarters could raise concerns about the company's cash position in relation to its short-term obligations. The decreasing trend implies a diminishing ability to cover current liabilities solely with cash on hand.
Overall, while the current and quick ratios suggest that Organon & Co. typically had sufficient liquidity to meet short-term obligations, the declining trend in the cash ratio warrants attention to ensure the company maintains an optimal cash position for liquidity needs in the future.
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 | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 101.72 | 107.55 | 106.06 | 96.62 | 75.83 | 70.39 | 69.68 | 63.85 | 39.07 |
The cash conversion cycle of Organon & Co. has shown some variability over the past eight quarters. In Q4 2023, the cash conversion cycle was 101.78 days, which was a decrease from the previous quarter. This indicates that the company was able to convert its inventory into cash more efficiently in Q4 2023 compared to Q3 2023. However, the cash conversion cycle in Q4 2023 was still higher than the levels seen in the earlier quarters of 2022.
Overall, the trend in the cash conversion cycle for Organon & Co. has shown some fluctuations, but it has generally been increasing over the past quarters. A longer cash conversion cycle may indicate that the company is taking more time to sell its inventory and collect payments from customers, which can tie up cash and impact liquidity. Therefore, it would be important for Organon & Co. to monitor and potentially improve its cash conversion cycle to ensure efficient working capital management.