Sonoco Products Company (SON)

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 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Current ratio 0.79 2.36 1.30 1.31 1.76 1.89 1.55 1.47 1.35 1.37 1.36 1.31 1.09 1.19 1.17 1.27 1.21 1.52 1.42 1.11
Quick ratio 0.11 1.15 0.09 0.11 0.13 0.24 0.21 0.13 0.13 0.10 0.10 0.09 0.11 0.12 0.19 0.38 0.37 0.52 0.54 0.09
Cash ratio 0.11 1.15 0.09 0.11 0.13 0.24 0.21 0.13 0.13 0.10 0.10 0.09 0.11 0.12 0.19 0.38 0.37 0.52 0.54 0.09

Sonoco Products Company's liquidity ratios indicate its ability to meet short-term obligations. The current ratio, which measures the company's ability to cover current liabilities with current assets, has fluctuated over the years but generally stayed above 1, with a peak of 2.36 on September 30, 2024. This suggests that the company has had an adequate level of current assets to cover its short-term obligations.

On the other hand, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has shown more variability. It dipped to as low as 0.09 on March 31, 2020, indicating a tight liquidity position. However, it improved over time and spiked to 1.15 on September 30, 2024, reflecting a significant increase in the ability to meet short-term obligations without relying on inventory.

The cash ratio, which is the most conservative measure of liquidity as it considers only cash and cash equivalents to cover current liabilities, followed a similar trend to the quick ratio. It hit its lowest point at 0.09 on June 30, 2020, before improving and reaching a high of 1.15 on September 30, 2024, indicating a strong cash position to fulfill immediate obligations.

Overall, Sonoco Products Company's liquidity ratios reflect fluctuations over time but generally indicate the company's ability to manage short-term financial commitments, ensuring stability and solvency in the face of operating needs.

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 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Cash conversion cycle days 74.72 53.22 51.33 51.68 52.81 55.71 61.56 68.63 69.31 66.02 67.72 65.31 45.31 43.44 42.26 40.91 39.25 39.20 45.69 42.73

The cash conversion cycle for Sonoco Products Company has demonstrated fluctuations over the observed period from March 31, 2020, to December 31, 2024. Initially, the company's cash conversion cycle was around 42-46 days, indicating it took approximately this amount of time to convert investments in inventory into cash flows from sales.

However, as of March 31, 2022, there was a notable increase in the cash conversion cycle to 65.31 days, peaking at 74.72 days by December 31, 2024. This suggests an extended time duration required by the company to convert its resources back into cash.

Overall, the increasing trend in the cash conversion cycle from 2022 to 2024 indicates potential challenges in efficiently managing working capital and turning inventory and accounts receivable into cash within a reasonable timeframe. It may be a sign that the company is facing difficulties in optimizing operations to enhance liquidity and cash flow.