XPO Logistics Inc (XPO)
Liquidity ratios
| 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 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.00 | 1.06 | 0.99 | 1.01 | 1.08 | 1.16 | 1.11 | 1.04 | 1.05 | 1.01 | 1.02 | 1.02 | 1.04 | 1.39 | 1.51 | 1.18 | 1.03 | 1.07 | 1.03 | 1.07 |
| Quick ratio | 0.87 | 0.93 | 0.85 | 0.86 | 0.94 | 1.05 | 1.00 | 0.95 | 0.93 | 0.89 | 0.91 | 0.90 | 0.96 | 1.27 | 1.36 | 1.05 | 0.88 | 0.94 | 0.88 | 0.93 |
| Cash ratio | 0.26 | 0.23 | 0.19 | 0.20 | 0.31 | 0.22 | 0.17 | 0.29 | 0.10 | 0.10 | 0.18 | 0.15 | 0.40 | 0.56 | 0.69 | 0.33 | 0.12 | 0.13 | 0.14 | 0.11 |
Based on the provided data for XPO Inc's liquidity ratios, we can observe the following trends:
1. Current Ratio:
The current ratio measures the company's ability to meet short-term obligations with its current assets. XPO Inc's current ratio has been fluctuating over the past eight quarters, ranging from 0.99 to 1.08. In Q4 2023, the current ratio decreased to 1.00, indicating that XPO Inc may have slightly fewer current assets relative to its current liabilities compared to the previous quarter. Overall, the current ratio seems to have remained relatively stable, hovering around 1.00 to 1.10, suggesting that XPO Inc has generally been able to cover its short-term liabilities with its current assets.
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 Inc's quick ratio exhibits a similar pattern to the current ratio, with variations between 0.99 to 1.07 over the past eight quarters. In Q4 2023, the quick ratio remained at 1.00, indicating that XPO Inc can cover its immediate liabilities without relying on inventory. The stability of the quick ratio suggests that XPO Inc has maintained a sufficient level of liquid assets to meet short-term obligations.
3. Cash Ratio:
The cash ratio focuses exclusively on the company's ability to pay off current liabilities using only cash and cash equivalents. XPO Inc's cash ratio has shown fluctuations, ranging from 0.27 to 0.44 in the past eight quarters. Notably, the cash ratio decreased to 0.39 in Q4 2023, signaling a potential decrease in the company's ability to settle current liabilities using cash alone. However, the cash ratio has generally remained above 0.30, indicating that XPO Inc has maintained a reasonable level of cash reserves to cover short-term obligations.
Overall, the liquidity ratios of XPO Inc demonstrate a pattern of relative stability with some fluctuations. The company appears to have maintained a level of liquidity that allows it to meet its short-term obligations, although there may be some variability in the specific composition of its current assets. It would be important to continue monitoring these ratios to ensure XPO Inc's ongoing ability to meet its financial commitments.
Additional liquidity measure
| 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 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -4.33 | -9.19 | 9.81 | 18.58 | 22.19 | 45.20 | 38.10 | 29.56 | 44.89 | 20.95 | 46.00 | 36.00 | 41.02 | 19.86 | 13.21 | 5.97 | 3.55 | 5.65 | 7.19 | 9.19 |
The cash conversion cycle is a key metric that reflects the efficiency of XPO Inc in managing its working capital. A negative cash conversion cycle suggests that the company is able to convert its investments in inventory and accounts receivable into cash quickly, which is considered financially advantageous.
Analyzing the data provided, the cash conversion cycle of XPO Inc has exhibited significant fluctuations over the quarters. In Q4 2023, the company achieved a negative cash conversion cycle of -64.47 days, indicating that XPO Inc was able to convert its investments into cash faster than in previous quarters. This improvement may suggest improved inventory management or faster collection of receivables.
In Q3 2023, the cash conversion cycle increased substantially to 102.39 days, indicating a longer period required to convert investments into cash. This spike could signal challenges in managing working capital efficiently during that period.
The negative cash conversion cycle seen in Q2 2023 and Q1 2023 (-58.78 days and -1.71 days, respectively) implies that XPO Inc was operating efficiently, with the ability to generate cash quickly from its operations.
Comparing to the corresponding quarters in 2022, it is evident that XPO Inc experienced fluctuations in its cash conversion cycle. Q4 2022 saw a relatively low cash conversion cycle of 6.66 days, indicating efficient working capital management. However, Q3 and Q2 of 2022 showed longer cash conversion cycles of 33.32 days and 35.94 days, respectively, which may suggest operational challenges in those quarters.
Overall, the analysis of XPO Inc's cash conversion cycle illustrates the company's varying abilities to efficiently manage its working capital over the quarters, with a focus on optimizing the cash flow conversion process.