Olin Corporation (OLN)
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 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.29 | 1.50 | 1.57 | 1.60 | 1.38 | 1.41 | 1.44 | 1.49 | 1.34 | 1.45 | 1.65 | 1.65 | 1.43 | 1.60 | 1.75 | 1.11 | 1.58 | 1.64 | 1.64 | 1.48 |
| Quick ratio | 0.12 | 0.13 | 0.14 | 0.14 | 0.15 | 0.12 | 0.17 | 0.12 | 0.11 | 0.19 | 0.25 | 0.22 | 0.17 | 0.29 | 0.28 | 0.14 | 0.91 | 0.95 | 0.93 | 0.80 |
| Cash ratio | 0.11 | 0.11 | 0.12 | 0.12 | 0.12 | 0.10 | 0.16 | 0.12 | 0.11 | 0.19 | 0.20 | 0.21 | 0.16 | 0.27 | 0.26 | 0.12 | 0.20 | 0.16 | 0.12 | 0.09 |
The liquidity ratios of Olin Corp. provide insight into the company's ability to meet its short-term obligations and efficiently manage its current assets.
The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, has shown some fluctuations over the previous eight quarters. It decreased from 1.60 in Q1 2023 to 1.29 in Q4 2023, indicating a potential decrease in the company's short-term liquidity position. However, it generally stays above 1, suggesting that Olin Corp. typically has sufficient current assets to cover its current liabilities.
The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity as it excludes inventory from current assets. Olin Corp.'s quick ratio has also experienced variability but has generally hovered around 0.80 over the last two years. A quick ratio below 1 indicates that the company may have difficulty meeting its immediate obligations without relying on selling inventory.
The cash ratio, the most conservative liquidity measure, focuses solely on cash and cash equivalents to assess the company's ability to cover its current liabilities. Olin Corp.'s cash ratio has shown some fluctuations but has remained relatively stable around 0.15 to 0.17 over the past eight quarters. This suggests that the company has a modest amount of cash available relative to its short-term obligations.
Overall, Olin Corp. seems to maintain a reasonable level of liquidity as indicated by its current, quick, and cash ratios. However, the fluctuations in these ratios over time may warrant further investigation into the company's cash management practices and working capital efficiency.
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 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 5.76 | 16.42 | 19.40 | 14.89 | 6.71 | 3.46 | -1.50 | 5.83 | 1.08 | 0.97 | -0.41 | -1.29 | -2.12 | 1.15 | 7.64 | 1.22 | 49.48 | 53.40 | 38.83 | 33.74 |
The cash conversion cycle measures how efficiently a company manages its working capital, representing the time it takes for a company to convert its investment in inventory and other resources into cash flows from sales. In the case of Olin Corp., the trend in the cash conversion cycle over the past few quarters shows some fluctuations.
In Q4 2022, Olin Corp. had a relatively low cash conversion cycle of 42.96 days, indicating that the company was efficient in managing its working capital. However, this metric increased in the following quarters, reaching its highest level in Q3 2023 at 63.06 days. This suggests that Olin Corp. took longer to convert its investments into cash during that period.
Despite the slight improvement in Q4 2023 compared to the previous quarter, with a cash conversion cycle of 52.91 days, the company still has room for enhancing its working capital management efficiency. Overall, the fluctuating trend in Olin Corp.'s cash conversion cycle reflects potential challenges in optimizing its cash flows and working capital utilization. Continued monitoring and strategic adjustments may be necessary to ensure the company's financial health and operational efficiency.