Olin Corporation (OLN)

Based on the provided data, Olin Corporation's liquidity ratios have exhibited a mixed performance over the years.

Starting with the current ratio, which measures the company's ability to cover its short-term obligations with its current assets, we see a slight downward trend from 1.43 in 2020 to 1.27 in 2024. While the ratio remains above 1, indicating that Olin has sufficient current assets to cover its current liabilities, the decreasing trend raises some concerns about the company's liquidity position.

Moving on to the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, we observe a similar declining trend from 0.16 in 2020 to 0.11 in 2024. This indicates that Olin may have difficulty meeting its short-term obligations using only its most liquid assets, such as cash and marketable securities.

Lastly, the cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents in relation to current liabilities, also shows a consistent value of 0.11 from 2021 to 2024. This suggests that Olin might not have enough cash on hand to cover its current liabilities, which could potentially pose liquidity challenges.

In conclusion, Olin Corporation's liquidity ratios indicate a weakening liquidity position over the years, with a decreasing current ratio and quick ratio. The consistent low cash ratio further emphasizes the company's potential liquidity constraints. It would be prudent for Olin to closely monitor and manage its liquidity position to ensure its ability to meet its short-term financial obligations.

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Additional liquidity measure

The cash conversion cycle of Olin Corporation has shown some fluctuations over the past five years. In 2020, the company's cash conversion cycle was 45.82 days, demonstrating a relatively efficient cycle. However, we observed an increase in the cycle to 47.90 days in 2021, followed by a slight decrease to 47.79 days in 2022.

There was a significant uptick in the cash conversion cycle in 2023, reaching 53.76 days, indicating a potential delay in converting resources into cash during that period. In 2024, the cycle decreased slightly to 51.80 days, but it remained elevated compared to the earlier years.

Overall, the trend in Olin Corporation's cash conversion cycle suggests a need for the company to focus on managing its working capital more effectively to potentially improve its cash conversion efficiency and optimize its cash flows in the future.