Perrigo Company PLC (PRGO)

Perrigo Company PLC's liquidity ratios show a mixed trend over the years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has generally been strong and improving until a slight decline in 2023. The ratio increased from 2.27 in 2020 to 2.44 in 2022, indicating a healthy ability to meet short-term obligations, but dropped to 1.79 in 2023 before recovering to 2.38 in 2024.

On the other hand, the quick ratio, which provides a more stringent assessment of liquidity by excluding inventories from current assets, showed significant fluctuations. It was notably low at 0.47 in 2020, increased substantially to 1.17 in 2021, dropped to 0.54 in 2022, remained stable in 2023, and saw a slight increase to 0.54 in 2024. This indicates that the company may have difficulty meeting its short-term obligations with its most liquid assets alone in certain years.

The cash ratio, which measures the ability to cover short-term liabilities with cash and cash equivalents, mirrored the trend of the quick ratio. The ratio was 0.47 in 2020, increased to 1.17 in 2021, dropped to 0.54 in 2022, remained stable in 2023, and increased slightly to 0.54 in 2024. This suggests that Perrigo's cash position improved significantly in 2021 but fluctuated in subsequent years.

Overall, while Perrigo Company PLC maintained a healthy current ratio throughout the period, its quick and cash ratios showed more variability, signaling potential challenges in meeting short-term obligations solely with its most liquid assets. It would be prudent for the company to continue monitoring and managing its liquidity position effectively to ensure ongoing financial stability.

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Additional liquidity measure

The cash conversion cycle for Perrigo Company PLC has shown a slight increasing trend over the years, starting at 134.87 days as of December 31, 2020, and reaching 139.49 days by December 31, 2024. This indicates that Perrigo is taking slightly longer to convert its investments in inventory back into cash over the period under consideration. A longer cash conversion cycle can imply inefficiencies in managing working capital or potential issues in inventory turnover and collection of receivables. It's essential for Perrigo to closely monitor and manage its cash conversion cycle to ensure optimal liquidity and operational efficiency.