Danaher Corporation (DHR)

Danaher Corp.'s liquidity ratios provide insight into its ability to meet short-term obligations. The current ratio has exhibited some fluctuations over the past five years, ranging from a low of 1.43 in 2021 to a high of 1.89 in 2022. This ratio indicates that the company has generally been able to cover its current liabilities with its current assets, with a current ratio of 1.68 as of Dec 31, 2023.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also varied but remained within a reasonable range. The quick ratio stood at 1.37 as of Dec 31, 2023, suggesting that the company has an adequate level of liquid assets to cover its short-term liabilities.

The cash ratio, which is the most conservative measure of liquidity as it only considers cash and cash equivalents, has trended downwards over the past five years. The cash ratio was 0.90 as of Dec 31, 2023, indicating that the company may have a lower level of cash to meet its current obligations.

Overall, Danaher Corp. appears to have maintained a reasonable level of liquidity over the years, as evidenced by the current and quick ratios. However, the decreasing trend in the cash ratio warrants further monitoring to ensure the company's ability to meet its short-term obligations purely with cash resources.

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See also:

Danaher Corporation Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Danaher Corp. has been fluctuating over the past five years. In 2023, the cash conversion cycle increased to 90.59 days from 80.77 days in 2022. This suggests that the company took longer to convert its investments in inventory and accounts receivable into cash in 2023 compared to the previous year.

In 2021, the cash conversion cycle decreased significantly to 63.67 days from 75.30 days in 2020, indicating that the company improved its efficiency in managing its working capital and converting it into cash more quickly.

However, in 2019, although the cash conversion cycle was relatively low at 70.28 days, it increased in the subsequent years before reaching its peak in 2023.

Overall, a longer cash conversion cycle may indicate inefficiencies in inventory management or collection of accounts receivable, while a shorter cycle typically signifies better liquidity and operational efficiency. Danaher Corp. may need to focus on optimizing its working capital management to improve its cash conversion cycle in the future.