Packaging Corp of America (PKG)

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 2.57 2.17 3.35 3.12 2.86 3.02 3.07 2.96 3.09 2.31 3.63 3.55 3.51 3.54 3.89 3.51 3.42 3.28 3.29 3.05
Quick ratio 1.72 1.35 2.01 1.80 1.68 1.92 2.02 1.91 2.02 1.74 2.52 2.48 2.45 2.47 2.58 2.33 2.27 2.18 2.09 1.85
Cash ratio 0.90 0.53 0.73 0.56 0.46 0.75 0.77 0.73 0.80 1.09 1.31 1.35 1.38 1.35 1.38 1.15 1.06 0.96 0.78 0.60

Packaging Corp of America's liquidity ratios, which include the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations and manage its financial resources effectively.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown fluctuations over the quarters, ranging from 2.17 to 3.35. The ratio has generally been above 2, indicating a healthy liquidity position. However, the current ratio decreased in Q3 2023 compared to Q2 2023, suggesting a potential decrease in the company's short-term liquidity.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also exhibited variability but has generally been above 1. This indicates that Packaging Corp of America can meet its short-term obligations without relying on the sale of inventory. Similar to the current ratio, the quick ratio decreased in Q3 2023 compared to the previous quarter.

The cash ratio, which is the most conservative liquidity measure focusing only on cash and cash equivalents, has shown improvements across quarters, with values ranging from 0.53 to 0.95. Despite fluctuations, the upward trend in the cash ratio suggests an enhanced ability to cover short-term liabilities with cash on hand, which is a positive indicator of liquidity strength.

In general, while Packaging Corp of America's liquidity ratios have shown some fluctuations, the company has maintained a solid liquidity position over the quarters, with current and quick ratios consistently above industry benchmarks. However, it is essential for the company to closely monitor these ratios and ensure they remain at comfortable levels to meet its short-term financial obligations effectively.

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 82.36 80.85 80.83 77.11 76.22 75.80 76.77 74.98 78.22 76.33 76.64 74.40 71.57 74.41 77.55 72.65 73.56 75.92 76.83 65.01

Packaging Corp Of America's cash conversion cycle, a metric that reflects the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales, has shown a generally stable trend over the past eight quarters. The company's cash conversion cycle ranged between 75.43 and 85.06 days during this period, with a slight fluctuation but no significant upward or downward trend.

The cash conversion cycle reached its peak at 85.06 days in Q4 2023 and the lowest point was observed in Q1 2022 at 75.43 days. This indicates that on average, Packaging Corp Of America takes approximately 75-85 days to convert its investments into cash. Overall, the company has been efficient in managing its cash conversion cycle, maintaining a relatively consistent performance over the quarters analyzed.

It is important for Packaging Corp Of America to continue monitoring and managing its cash conversion cycle effectively to optimize its working capital and ensure healthy cash flow operations. A stable and efficient cash conversion cycle can help the company meet its financial obligations, manage inventory effectively, and improve overall liquidity.