Perrigo Company PLC (PRGO)
Liquidity ratios
| Jun 30, 2024 | Mar 31, 2024 | 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.99 | 1.81 | 1.79 | 2.74 | 2.62 | 2.52 | 2.44 | 2.55 | 2.61 | 4.01 | 2.43 | 2.11 | 2.23 | 3.10 | 2.27 | 2.54 | 2.05 | 1.86 | 2.04 | 2.07 |
| Quick ratio | 0.85 | 0.93 | 0.94 | 1.33 | 1.24 | 0.51 | 1.17 | 0.46 | 0.48 | 2.00 | 1.59 | 1.04 | 0.16 | 0.33 | 0.46 | 0.64 | 0.79 | 0.31 | 0.27 | 0.30 |
| Cash ratio | 0.36 | 0.42 | 0.47 | 0.59 | 0.53 | 0.51 | 0.54 | 0.46 | 0.48 | 2.00 | 1.17 | 1.04 | 0.16 | 0.33 | 0.46 | 0.64 | 0.79 | 0.31 | 0.27 | 0.30 |
Perrigo Company PLC's liquidity ratios, namely the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations using its current assets.
1. Current Ratio: The current ratio for Perrigo has been relatively stable, ranging from 1.79 to 4.01 over the past few quarters, with a current ratio of 1.99 as of June 30, 2024. This indicates that the company has $1.99 in current assets for every $1 in current liabilities. While a current ratio above 1 suggests the company can cover its short-term obligations, a declining trend may indicate potential liquidity challenges.
2. Quick Ratio: Perrigo's quick ratio, which excludes inventory from current assets, fluctuated significantly, ranging from 0.16 to 2.00. As of June 30, 2024, the quick ratio was 0.85, indicating that the company may face challenges in meeting its short-term obligations without relying on inventory. A quick ratio below 1 raises concerns about the company's ability to quickly convert assets into cash to meet obligations.
3. Cash Ratio: The cash ratio, which is even more stringent as it considers only cash and cash equivalents, also varied notably for Perrigo. The cash ratio ranged from 0.16 to 2.00, with a value of 0.36 as of June 30, 2024. This suggests that the company has $0.36 in cash and equivalents to cover each dollar of current liabilities. A low cash ratio may indicate a limited ability to meet short-term obligations with readily available cash.
Overall, while the current ratio indicates Perrigo has a sufficient level of current assets to cover current liabilities, the declining trend in the quick ratio and relatively low cash ratio suggest the company should carefully manage its liquidity position to ensure it can meet its short-term financial obligations effectively.
Additional liquidity measure
| Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 142.78 | 145.61 | 139.35 | 144.50 | 143.05 | 81.72 | 131.83 | 76.76 | 73.27 | 70.32 | 139.23 | 89.53 | 90.44 | 84.97 | 68.30 | 62.99 | 61.04 | 42.82 | 53.26 | 57.14 |
The cash conversion cycle for Perrigo Company PLC has shown fluctuations over the periods under review. The company's cash conversion cycle, a key metric that measures how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales, ranged from as high as 145.61 days to as low as 42.82 days.
The trend indicates that the company's efficiency in managing its working capital and converting its investments into cash has varied. A longer cash conversion cycle, as seen in some periods, suggests that Perrigo may be taking longer to turn its investments in inventory and other operating activities into cash received from customers. Conversely, the periods with shorter cash conversion cycles indicate that the company may be able to quickly convert its investments into cash.
It is important for Perrigo to closely monitor and manage its cash conversion cycle as an excessively long cycle can tie up valuable capital and impact liquidity, while a very short cycle may signal inventory shortages or aggressive revenue recognition practices. Overall, a consistently optimized cash conversion cycle may indicate efficient operations and effective working capital management within the company.