Adient PLC (ADNT)

Current ratio

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Total current assets	US$ in thousands	4,316,000	4,163,000	5,086,000	4,482,000	4,116,000
Total current liabilities	US$ in thousands	3,738,000	3,501,000	3,511,000	3,819,000	3,835,000
Current ratio		1.15	1.19	1.45	1.17	1.07

September 30, 2023 calculation

Current ratio = Total current assets ÷ Total current liabilities
= $4,316,000K ÷ $3,738,000K
= 1.15

The current ratio is a measure of a company's ability to meet its short-term liabilities with its short-term assets. A ratio above 1 indicates that a company has more current assets than current liabilities, signaling good liquidity.

Analyzing Adient plc's current ratio over the past five years, we observe a fluctuating trend. In 2019, the current ratio was 1.07, indicating that the company had just enough current assets to cover its current liabilities. The following year, the ratio improved to 1.17, reflecting a slightly stronger liquidity position. Subsequently, in 2021, the current ratio significantly increased to 1.45, signaling a substantial improvement in the company's ability to meet short-term obligations.

However, in 2022, there was a slight decline in the current ratio to 1.19, indicating a reduction in liquidity compared to the previous year. This decline continued into 2023, with the current ratio falling to 1.15. Although the ratio remains above 1, demonstrating that Adient plc still has more current assets than current liabilities, the decreasing trend suggests a potential decrease in liquidity and the need for further attention.

The fluctuation in Adient plc's current ratio implies variability in its ability to cover short-term obligations with its current assets. Management should analyze the underlying reasons for the fluctuation and take proactive measures to maintain a healthy current ratio, ensuring the company's ability to meet its short-term financial obligations. Additionally, investors and creditors should closely monitor this ratio, as the current ratio provides crucial insights into the company's short-term liquidity and financial health.