O-I Glass Inc (OI)

O-I Glass Inc's liquidity ratios, including the current ratio, quick ratio, and cash ratio, provide insight into the company's ability to meet its short-term obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has fluctuated over the past five years. In 2023, the current ratio improved to 1.23 compared to the previous year, which indicates that the company has $1.23 in current assets for every dollar of current liabilities. However, it is essential to note that the current ratio was also higher in 2021 and 2019 at 1.36 and 1.25 respectively, suggesting a more favorable liquidity position in those years.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. O-I Glass Inc's quick ratio has shown variability over the years, with a decrease to 0.68 in 2023 compared to 0.98 in 2020. A quick ratio above 1 is generally preferred, as it indicates that the company can cover its short-term obligations without relying on selling its inventory.

In terms of the cash ratio, which assesses the company's ability to cover its short-term liabilities with its cash and cash equivalents alone, O-I Glass Inc has experienced fluctuations as well. The cash ratio improved significantly in 2023 to 0.39 compared to 0.28 in 2019, indicating a better ability to meet immediate obligations with cash on hand.

Overall, while O-I Glass Inc's current ratio and cash ratio improved in 2023, the quick ratio declined, suggesting potential challenges in quickly meeting short-term obligations without relying on inventory. It is crucial for the company to strive for a balance between current assets and liabilities to maintain a healthy liquidity position and effectively manage its short-term financial needs.

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Additional liquidity measure

The cash conversion cycle for O-I Glass Inc has exhibited fluctuations over the past five years. In 2023, the company's cash conversion cycle stood at 14.50 days, reflecting a slight increase from the prior year. This indicates that O-I Glass is taking longer to convert its investments in inventory back into cash.

Comparing this to 2022, where the cash conversion cycle was 12.03 days, we see an improvement in efficiency as the company required fewer days to convert inventory and accounts receivable into cash. However, going back to 2021, the cycle increased to 16.47 days, signifying a delay in cash generation compared to the prior year.

Furthermore, in 2020 and 2019, O-I Glass displayed longer cash conversion cycles of 19.25 days and 21.83 days respectively. This suggests that the company has made progress in managing its working capital more effectively in recent years.

Overall, fluctuations in the cash conversion cycle for O-I Glass Inc indicate changes in the company's ability to efficiently manage its cash flow and working capital. It is important for the company to continue monitoring and improving this metric to optimize its liquidity position and operational efficiency.