Allegion PLC (ALLE)
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 | 1.26 | 2.03 | 1.93 | 1.87 | 1.73 | 1.79 | 2.87 | 1.85 | 1.86 | 1.51 | 2.03 | 2.07 | 2.20 | 2.29 | 2.11 | 2.02 | 1.98 | 1.90 | 1.71 | 1.75 |
| Quick ratio | 0.82 | 1.24 | 1.13 | 1.10 | 0.97 | 1.02 | 2.05 | 1.08 | 1.13 | 1.02 | 1.38 | 1.40 | 1.54 | 1.59 | 1.36 | 1.29 | 1.35 | 1.22 | 1.04 | 1.06 |
| Cash ratio | 0.43 | 0.56 | 0.49 | 0.44 | 0.41 | 0.41 | 1.51 | 0.52 | 0.66 | 0.63 | 0.82 | 0.78 | 0.92 | 0.88 | 0.65 | 0.54 | 0.70 | 0.47 | 0.31 | 0.32 |
Allegion plc's liquidity ratios, including the current ratio, quick ratio, and cash ratio, provide insight into the company's ability to meet short-term obligations and manage its current assets effectively.
Over the past eight quarters, the current ratio has fluctuated with values ranging from 1.26 to 2.87. This ratio measures the company's ability to cover its short-term liabilities with its current assets. A current ratio above 1 indicates that the company has more current assets than current liabilities, which is generally considered favorable. However, the current ratio has shown some variability, potentially indicating fluctuations in the company's working capital management.
The quick ratio, which excludes inventory from current assets, provides a more conservative measure of liquidity. Allegion plc's quick ratio has ranged from 0.85 to 2.17 over the same period. A quick ratio above 1 suggests that the company can cover its short-term obligations without relying on the sale of inventory. The fluctuation in the quick ratio may highlight changes in the composition of current assets and the company's ability to meet immediate liabilities.
The cash ratio, which is the most conservative liquidity measure, focuses solely on cash and cash equivalents to cover short-term obligations. Allegion plc's cash ratio has varied between 0.47 and 1.62. A cash ratio below 1 indicates that the company may need to rely on sources other than cash to meet its short-term obligations. The fluctuations in the cash ratio may reflect changes in the company's cash position and liquidity management practices.
In summary, Allegion plc has demonstrated varying levels of liquidity over the past eight quarters, as reflected in its current ratio, quick ratio, and cash ratio. Analysts should consider the trend and magnitude of these ratios to assess the company's ability to manage short-term financial obligations effectively.
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 | 65.34 | 73.19 | 70.68 | 72.88 | 72.15 | 80.07 | 65.01 | 63.63 | 55.53 | 66.84 | 56.47 | 59.95 | 57.06 | 64.45 | 60.94 | 56.62 | 51.28 | 61.78 | 66.23 | 64.19 |
Allegion plc's cash conversion cycle has shown fluctuations over the past several quarters. In Q4 2023, the company's cash conversion cycle was 72.90 days, which improved from the previous quarter. This indicates that Allegion plc was able to convert its invested resources into cash more efficiently. However, compared to the same period last year, the cash conversion cycle was slightly higher.
In general, the trend of the cash conversion cycle has been relatively stable over the past year, hovering around 70-90 days. It is essential for the company to closely monitor and manage its cash conversion cycle to ensure efficient use of resources and timely collections from customers. The fluctuations in the cycle may be influenced by various factors such as sales patterns, inventory management, and accounts receivable practices.
Overall, Allegion plc's cash conversion cycle analysis suggests that the company should continue to focus on optimizing its working capital management to enhance liquidity and profitability.