Omnicom Group Inc (OMC)

Omnicom Group Inc's liquidity ratios have shown a decline over the years based on the provided data.

1. Current Ratio: The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has decreased from 1.00 in 2020 to 0.95 in 2023, before slightly increasing to 1.00 in 2024. This ratio indicates a decreasing trend in Omnicom's short-term liquidity position.

2. Quick Ratio: The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also decreased from 0.86 in 2020 to 0.81 in 2023, before slightly increasing to 0.83 in 2024. This indicates that Omnicom may have more difficulty meeting its short-term obligations without relying on inventory.

3. Cash Ratio: The cash ratio, which measures the proportion of cash and cash equivalents to current liabilities, shows a downward trend from 0.36 in 2020 to 0.27 in both 2023 and 2024. This suggests that Omnicom's ability to cover its current liabilities solely with cash has decreased over the years.

Overall, these liquidity ratios indicate a gradual decline in Omnicom Group Inc's short-term liquidity position and ability to meet its immediate financial obligations as of the end of the provided years. It may be crucial for the company to monitor and potentially improve its liquidity management strategies to ensure financial stability in the future.

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Additional liquidity measure

Omnicom Group Inc has demonstrated a consistently negative cash conversion cycle over the past five years. This indicates that the company efficiently converts its resources into cash, as it takes less time to convert its investments in inventory and accounts receivable into cash inflows from sales.

The cash conversion cycle has shown a decreasing trend from -104.06 days in December 2020 to -79.27 days in December 2024. This signifies an improvement in Omnicom's working capital management efficiency over the period analyzed.

Having a negative cash conversion cycle means that Omnicom Group Inc is able to operate with a negative working capital, potentially benefiting from interest-free financing provided by its suppliers and clients. This may imply good bargaining power with suppliers and efficient accounts receivable collection practices.

Overall, the consistently negative cash conversion cycle reflects Omnicom's adeptness in managing its working capital efficiently, indicating strong liquidity and operational effectiveness.