RXO Inc. (RXO)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.26 | 1.17 | 1.24 | 1.33 | 1.37 |
| Quick ratio | 0.03 | 0.01 | 0.12 | 0.04 | 0.11 |
| Cash ratio | 0.03 | 0.01 | 0.12 | 0.04 | 0.11 |
RXO Inc.'s liquidity ratios show a mixed performance over the five-year period from 2020 to 2024.
Starting with the current ratio, which measures the firm's ability to meet short-term obligations with its current assets, we see a slight decrease from 1.37 in 2020 to 1.26 in 2024. Although the current ratio has fluctuated, it generally remains above 1, indicating that RXO Inc. has sufficient current assets to cover its current liabilities.
Moving to the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, we observe a significant decline from 0.11 in 2020 to 0.03 in 2024. This decreasing trend suggests that RXO Inc. may have difficulties meeting its short-term obligations without relying on inventory liquidation.
Lastly, the cash ratio, which focuses solely on the company's ability to cover current liabilities with its cash and cash equivalents, has also seen a decrease from 0.11 in 2020 to 0.03 in 2024. This trend indicates that RXO Inc.'s liquidity position in terms of cash reserves has weakened over the years.
In summary, while RXO Inc. has maintained a current ratio above 1, signaling a generally healthy liquidity position, the declining trend in quick ratio and cash ratio raises concerns about the company's ability to meet its short-term obligations without relying heavily on the sale of inventory or access to cash reserves.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Based on the data provided, RXO Inc. has consistently maintained a cash conversion cycle of 0.00 days across the years from 2020 to 2024. This implies that RXO Inc. is efficiently managing its cash flow with minimal time delays between the outflow of cash for operating activities and the inflow of cash from sales. A cash conversion cycle of 0.00 days indicates that RXO Inc. is able to quickly convert its investments in inventory into sales and then into cash without encountering significant delays or liquidity issues. This efficient management of the cash conversion cycle suggests that RXO Inc. has a streamlined operation and effective working capital management practices in place.