XPO Logistics Inc (XPO)

Based on the provided data, let's analyze XPO Logistics Inc's liquidity ratios:

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets.
- XPO Logistics Inc's current ratio has been relatively stable over the years, ranging from 1.00 to 1.08.
- Although the current ratio is slightly above 1, indicating that the company has enough current assets to cover its current liabilities, it is important to monitor any potential fluctuations in this ratio.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets.
- XPO Logistics Inc's quick ratio has been below 1 over the years, ranging from 0.87 to 0.94.
- A quick ratio below 1 suggests that the company may have difficulty meeting its short-term obligations without relying on selling inventory, which may raise concerns about its liquidity position.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, measuring the company's ability to cover its current liabilities with cash and cash equivalents.
- XPO Logistics Inc's cash ratio has varied significantly over the years, ranging from 0.10 to 0.40.
- A decreasing trend in the cash ratio may indicate a potential liquidity risk if the company does not have sufficient cash to cover its short-term liabilities.

In summary, while XPO Logistics Inc's current ratio indicates a satisfactory level of liquidity, the low quick ratio and fluctuating cash ratio suggest that the company may need to closely monitor its liquidity position, especially in terms of covering short-term obligations without relying on inventory or maintaining sufficient cash reserves.

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Additional liquidity measure

The cash conversion cycle of XPO Logistics Inc has shown significant fluctuations over the past five years.

As of December 31, 2020, the company's cash conversion cycle stood at 142.10 days, indicating that it took XPO Logistics Inc approximately 142 days to convert its investments in inventory and accounts receivable into cash inflows from sales.

By December 31, 2021, there was a noticeable improvement in efficiency, with the cash conversion cycle decreasing to 89.99 days. This decline suggests that the company was managing its inventory and receivables more effectively, reducing the time required to generate cash from its operating activities.

The trend continued to improve dramatically by December 31, 2022, when the cash conversion cycle decreased significantly to 15.18 days. This sharp decline indicates that XPO Logistics Inc was able to convert its resources into cash much faster, potentially through better inventory management and more efficient collection of receivables.

Interestingly, by December 31, 2023, the company's cash conversion cycle turned negative, standing at -4.12 days. A negative cash conversion cycle implies that XPO Logistics Inc was able to collect cash from customers before having to pay its suppliers, leading to a favorable liquidity position and enhanced working capital management.

By December 31, 2024, the cash conversion cycle slightly increased to 4.95 days, implying that the company was still efficiently managing its cash conversion processes, although not as exceptionally as in the previous year.

Overall, the data reflects XPO Logistics Inc's continuous efforts to streamline its operations and optimize working capital management, leading to improved cash flow efficiency over the five-year period.