Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Norfolk Southern Corp., liquidity ratios
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Current ratio | 0.86 | 1.07 | 0.90 | 0.72 | 0.84 | |
| Quick ratio | 0.72 | 0.91 | 0.65 | 0.53 | 0.65 | |
| Cash ratio | 0.33 | 0.52 | 0.25 | 0.14 | 0.27 |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Current Ratio
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The current ratio showed a declining trend from 0.84 in 2017 to 0.72 in 2018, indicating a reduction in short-term liquidity. However, it improved significantly to 0.90 in 2019 and peaked at 1.07 in 2020, suggesting enhanced ability to cover current liabilities with current assets. In 2021, the ratio decreased to 0.86, reflecting a slight weakening in liquidity but remaining above the earlier years of 2017 and 2018.
- Quick Ratio
-
The quick ratio followed a comparable pattern to the current ratio. It declined from 0.65 in 2017 to 0.53 in 2018, signaling a reduced capacity to meet short-term obligations without relying on inventory. An improvement occurred in 2019, increasing to 0.65, and then a marked rise to 0.91 in 2020 indicated a stronger liquid assets position. Nevertheless, the quick ratio decreased again to 0.72 in 2021, yet it remained above the levels seen in 2017 and 2018.
- Cash Ratio
-
The cash ratio exhibited more volatility. It dropped sharply from 0.27 in 2017 to 0.14 in 2018, pointing to a significant reduction in cash and cash equivalents relative to current liabilities. The ratio improved to 0.25 in 2019 and saw a substantial increase to 0.52 in 2020, indicating a much stronger cash position. In 2021, the ratio declined to 0.33 but stayed well above the low point recorded in 2018, suggesting some recovery in cash reserves compared to prior years.
Current Ratio
Norfolk Southern Corp., current ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 2,167) | 2,318) | 2,081) | 1,862) | 2,149) | |
| Current liabilities | 2,521) | 2,160) | 2,300) | 2,591) | 2,545) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 0.86 | 1.07 | 0.90 | 0.72 | 0.84 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| FedEx Corp. | 1.51 | 1.58 | 1.45 | — | — | |
| Uber Technologies Inc. | 0.98 | 1.44 | — | — | — | |
| Union Pacific Corp. | 0.62 | 1.01 | — | — | — | |
| United Airlines Holdings Inc. | 1.19 | 1.16 | — | — | — | |
| United Parcel Service Inc. | 1.42 | 1.19 | — | — | — | |
| Current Ratio, Sector | ||||||
| Transportation | 1.24 | 1.28 | — | — | — | |
| Current Ratio, Industry | ||||||
| Industrials | 1.29 | 1.41 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Current ratio = Current assets ÷ Current liabilities
= 2,167 ÷ 2,521 = 0.86
2 Click competitor name to see calculations.
- Current Assets
- Current assets showed some fluctuation over the five-year period. Starting at $2,149 million at the end of 2017, they decreased to $1,862 million in 2018, followed by an increase to $2,081 million in 2019. The upward trend continued reaching a peak of $2,318 million in 2020, before slightly declining to $2,167 million in 2021.
- Current Liabilities
- Current liabilities initially rose from $2,545 million in 2017 to $2,591 million in 2018. After this peak, liabilities decreased to $2,300 million in 2019 and further to $2,160 million in 2020. However, there was a notable increase back to $2,521 million in 2021.
- Current Ratio
- The current ratio, which measures short-term liquidity, reflected notable changes corresponding to the movements in current assets and liabilities. It started at 0.84 in 2017, decreased to a low of 0.72 in 2018, indicating tighter liquidity. This ratio improved to 0.90 in 2019 and further to 1.07 in 2020, surpassing the critical threshold of 1.0, indicating improved ability to cover current liabilities with current assets. In 2021, the ratio declined to 0.86, suggesting a reduction in liquidity compared to the previous year but remaining higher than the 2018 low.
- Overall Analysis
- Throughout the period, current assets and current liabilities showed fluctuating patterns without a consistent trend. The current ratio mirrored these changes, indicating variability in short-term liquidity. The peak liquidity in 2020 was the most favorable position in the five-year period, closely tied to increased current assets and reduced current liabilities. The slight deterioration in 2021 suggests a need to monitor liquidity management closely to ensure it remains adequate for operational needs.
Quick Ratio
Norfolk Southern Corp., quick ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 839) | 1,115) | 580) | 358) | 690) | |
| Accounts receivable, net | 976) | 848) | 920) | 1,009) | 955) | |
| Total quick assets | 1,815) | 1,963) | 1,500) | 1,367) | 1,645) | |
| Current liabilities | 2,521) | 2,160) | 2,300) | 2,591) | 2,545) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 0.72 | 0.91 | 0.65 | 0.53 | 0.65 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| FedEx Corp. | 1.40 | 1.45 | 1.27 | — | — | |
| Uber Technologies Inc. | 0.82 | 1.19 | — | — | — | |
| Union Pacific Corp. | 0.47 | 0.79 | — | — | — | |
| United Airlines Holdings Inc. | 1.10 | 1.02 | — | — | — | |
| United Parcel Service Inc. | 1.32 | 1.00 | — | — | — | |
| Quick Ratio, Sector | ||||||
| Transportation | 1.13 | 1.10 | — | — | — | |
| Quick Ratio, Industry | ||||||
| Industrials | 0.80 | 0.87 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 1,815 ÷ 2,521 = 0.72
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets displayed a fluctuating trend over the five-year period. Starting at $1,645 million in 2017, there was a decline in 2018 to $1,367 million. Subsequently, the figure increased moderately in 2019 to $1,500 million and then experienced a significant rise in 2020, reaching $1,963 million. In 2021, total quick assets decreased somewhat to $1,815 million, though remaining above the 2017 and 2019 levels.
- Current liabilities
- Current liabilities demonstrated relative stability with minor fluctuations. From $2,545 million in 2017, liabilities increased slightly to $2,591 million in 2018, before decreasing to $2,300 million in 2019 and further to $2,160 million in 2020. In 2021, there was an uptick to $2,521 million, nearing the levels observed in 2017 and 2018.
- Quick ratio
- The quick ratio showed a variable pattern over the period. It started at 0.65 in 2017, declined to 0.53 in 2018 indicating reduced short-term liquidity relative to current liabilities. The ratio improved back to 0.65 in 2019 and saw a marked increase to 0.91 in 2020, representing a stronger liquidity position. However, in 2021, it declined to 0.72, still above the earlier years but reflecting a reduction from the peak in 2020.
- Overall analysis
- The data suggests that liquidity, as measured by quick assets and the quick ratio, experienced a dip in 2018 but generally improved thereafter, peaking in 2020 before slightly declining in 2021. The rise in quick assets in 2020 contributed to a substantial enhancement in the quick ratio, indicating better short-term financial health relative to current liabilities. The movements in current liabilities were modest but notable in 2020 when liabilities were at their lowest, supporting improved liquidity metrics. The decline in quick ratio in 2021, despite remaining above multiple prior years, may warrant monitoring to ensure sustained short-term financial stability.
Cash Ratio
Norfolk Southern Corp., cash ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 839) | 1,115) | 580) | 358) | 690) | |
| Total cash assets | 839) | 1,115) | 580) | 358) | 690) | |
| Current liabilities | 2,521) | 2,160) | 2,300) | 2,591) | 2,545) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.33 | 0.52 | 0.25 | 0.14 | 0.27 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| FedEx Corp. | 0.52 | 0.47 | 0.26 | — | — | |
| Uber Technologies Inc. | 0.55 | 1.03 | — | — | — | |
| Union Pacific Corp. | 0.17 | 0.43 | — | — | — | |
| United Airlines Holdings Inc. | 1.01 | 0.92 | — | — | — | |
| United Parcel Service Inc. | 0.60 | 0.37 | — | — | — | |
| Cash Ratio, Sector | ||||||
| Transportation | 0.65 | 0.62 | — | — | — | |
| Cash Ratio, Industry | ||||||
| Industrials | 0.39 | 0.47 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 839 ÷ 2,521 = 0.33
2 Click competitor name to see calculations.
- Total cash assets
- The total cash assets showed a fluctuating trend over the observed period. Initially, there was a decrease from 690 million US dollars in 2017 to 358 million in 2018. Subsequently, cash assets increased to 580 million in 2019 and further surged to a peak of 1115 million in 2020. In 2021, the cash assets declined again to 839 million, remaining significantly higher than the levels at the start of the period.
- Current liabilities
- Current liabilities remained relatively stable with minor fluctuations. The liabilities slightly increased from 2545 million in 2017 to 2591 million in 2018, followed by a decrease to 2300 million in 2019 and further down to 2160 million in 2020. However, in 2021 current liabilities rose again to 2521 million, nearing the initial values from 2017 and 2018.
- Cash ratio
- The cash ratio exhibited variability consistent with the trend in total cash assets. Starting at 0.27 in 2017, the ratio decreased to 0.14 in 2018, reflecting the reduction in cash assets relative to current liabilities. It improved to 0.25 in 2019 and more than doubled to 0.52 in 2020, indicating a significantly stronger liquidity position that year. By 2021, the ratio decreased to 0.33 but remained above the levels seen in 2017 and 2018, suggesting a moderately improved liquidity status compared to the early years of the period analyzed.