Allegion PLC (ALLE)

Liquidity ratios

	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Current ratio	2.04	1.71	1.66	1.31	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
Quick ratio	0.72	0.81	0.72	0.38	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
Cash ratio	0.72	0.81	0.72	0.38	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

Allegion PLC's liquidity ratios, as indicated by the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations.

The current ratio, measuring current assets against current liabilities, shows a fluctuating trend over the reported periods. It increased from 2.02 in March 2020 to peak at 2.87 in June 2022, before declining to 2.04 by December 2024. This indicates that the company had more than enough current assets to cover its short-term liabilities during most periods, although there was a slight decrease towards the end of the period.

The quick ratio, which is a more stringent measure of liquidity excluding inventory, had a more volatile pattern. It ranged from a low of 0.38 in March 2024 to a high of 1.51 in June 2022. This ratio suggests that Allegion PLC's ability to meet immediate obligations without relying on the sale of inventory fluctuated significantly over the reporting periods.

The cash ratio, which is the most conservative liquidity measure focusing only on cash and cash equivalents, followed a similar pattern to the quick ratio. It ranged from 0.38 in March 2024 to 1.51 in June 2022, reflecting the company's capacity to cover its short-term liabilities solely with cash on hand.

Overall, based on these liquidity ratios, Allegion PLC generally maintained a healthy liquidity position over the reporting periods, with the current ratio remaining above 1, indicating a strong ability to meet short-term obligations. However, the fluctuations in quick ratio and cash ratio suggest potential areas for improvement in managing liquidity risk.

Additional liquidity measure

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Cash conversion cycle	days	73.39	78.69	78.53	80.22	77.35	82.73	84.00	84.30	89.68	93.71	90.27	86.48	83.52	76.60	69.00	67.99	67.05	68.91	69.70	62.64

The cash conversion cycle (CCC) is a key metric that measures how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales. For Allegion PLC, the trend in the CCC over the past few years shows fluctuations but overall indicates an efficiency in managing working capital.

From March 31, 2020, to December 31, 2024, the CCC ranged from a low of 62.64 days to a high of 93.71 days. An increasing CCC typically suggests a longer time to convert investments into cash, reflecting potential inefficiencies in inventory management, accounts receivable collection, or accounts payable payment.

Allegion PLC experienced fluctuations in its CCC over the period, with some quarters showing improvements in cash conversion efficiency while others demonstrated slight deterioration. For example, the CCC increased significantly from March 31, 2022, to September 30, 2022, reaching its peak of 93.71 days before gradually declining.

Analyzing the CCC in conjunction with other financial metrics and industry benchmarks can provide more insights into Allegion PLC's operational efficiency, liquidity management, and overall financial health. Continuous monitoring of the CCC is essential for assessing the company's working capital management practices and identifying areas for improvement to optimize cash flow and profitability.