RXO Inc. (RXO)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1,256.10 | 1.33 | 1.17 | 1.14 | 1.17 | 1.29 | 1.31 | 1.25 | 1.24 | 1.38 | 1.41 | 1.23 | 1.33 |
| Quick ratio | 0.03 | 0.12 | 0.01 | 0.01 | 0.01 | 0.14 | 0.18 | 0.15 | 0.12 | 0.21 | 0.22 | 0.04 | 0.04 |
| Cash ratio | 0.03 | 0.12 | 0.01 | 0.01 | 0.01 | 0.14 | 0.18 | 0.15 | 0.12 | 0.21 | 0.22 | 0.04 | 0.04 |
Based on the provided data, I have analyzed the liquidity ratios of RXO Inc. over the period from December 31, 2021, to December 31, 2024.
1. Current Ratio:
The current ratio of RXO Inc. fluctuated between 1.14 and 1,256.10 over the period under review. This ratio indicates the company's ability to meet its short-term obligations with its current assets. Generally, a current ratio above 1 is considered healthy, as it suggests the company has more current assets to cover its current liabilities. However, the significant fluctuations in RXO Inc.'s current ratio raise concerns about the company's current asset management and liquidity position.
2. Quick Ratio:
The quick ratio of RXO Inc. ranged between 0.01 and 0.22 during the period. Also known as the acid-test ratio, this ratio provides a more stringent measure of liquidity as it excludes inventory from current assets. A quick ratio of less than 1 may indicate potential difficulty in meeting short-term obligations without relying on the sale of inventory. RXO Inc.'s quick ratio generally remained low, indicating a potential liquidity risk over the period.
3. Cash Ratio:
The cash ratio of RXO Inc. followed a similar trend to the quick ratio, fluctuating between 0.01 and 0.22 during the period. This ratio measures the company's ability to cover its current liabilities with its cash and cash equivalents alone. A low cash ratio suggests that the company may struggle to meet its short-term obligations if they come due immediately. RXO Inc.'s cash ratio remained consistently low, highlighting a limited ability to cover short-term liabilities with cash reserves only.
In summary, based on the liquidity ratios analysis, RXO Inc. appears to have faced challenges in maintaining a strong liquidity position throughout the period. The significant fluctuations and consistently low values of the quick ratio and cash ratio raise concerns about the company's ability to meet its short-term obligations without relying heavily on inventory or cash reserves. Further analysis of the company's working capital management and cash flow position may be required to address these liquidity concerns effectively.
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 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 throughout the period from December 31, 2021, to December 31, 2024. This indicates that the company is able to efficiently convert its investments in inventory and receivables into cash without facing any delays in the collection of receivables or sale of inventory. A cash conversion cycle of 0.00 days suggests that RXO Inc. is effectively managing its working capital and operating efficiently in terms of its cash flows. This could be a positive indicator of the company's liquidity and financial health.