Danaher Corporation (DHR)
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 | 1.40 | 1.37 | 1.43 | 1.85 | 1.68 | 2.26 | 2.08 | 1.89 | 1.89 | 1.78 | 1.75 | 1.68 | 1.43 | 1.48 | 2.26 | 2.05 | 1.86 | 2.08 | 2.20 | 1.32 |
| Quick ratio | 0.31 | 0.36 | 0.35 | 0.90 | 0.71 | 1.31 | 1.02 | 0.85 | 0.71 | 0.64 | 0.53 | 0.49 | 0.32 | 0.35 | 1.07 | 0.93 | 0.82 | 0.94 | 0.99 | 0.52 |
| Cash ratio | 0.31 | 0.36 | 0.35 | 0.90 | 0.71 | 1.31 | 1.02 | 0.85 | 0.71 | 0.64 | 0.53 | 0.49 | 0.32 | 0.35 | 1.07 | 0.93 | 0.82 | 0.94 | 0.99 | 0.52 |
Danaher Corporation's liquidity ratios indicate the company's ability to meet its short-term obligations.
1. Current Ratio: The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Danaher's current ratio fluctuates over time but generally stays above 1, indicating that the company has more than enough current assets to cover its current liabilities. A current ratio above 1 suggests that Danaher is in a strong position to meet its short-term obligations.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Danaher's quick ratio also fluctuates but remains relatively low compared to the current ratio. This implies that a significant portion of Danaher's current assets is tied up in inventory. While the quick ratio is generally below 1, it indicates that Danaher may face some difficulty in covering its short-term obligations without relying on inventory.
3. Cash Ratio: The cash ratio is the most conservative liquidity measure as it only considers cash and cash equivalents to cover current liabilities. Danaher's cash ratio follows a similar pattern to the quick ratio and remains relatively low, suggesting that the company may have limited cash reserves compared to its current liabilities. This could indicate that Danaher may need to rely on other liquid assets or financing options to fulfill its short-term commitments.
Overall, Danaher Corporation's liquidity ratios show a mixed picture, with the current ratio generally indicating a healthy liquidity position, while the quick and cash ratios suggest that the company may have some limitations in terms of immediate cash availability to meet short-term obligations.
See also:
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 | 87.96 | 120.81 | 113.80 | 103.06 | 96.06 | 90.35 | 93.53 | 100.10 | 90.65 | 96.05 | 98.35 | 94.39 | 87.81 | 89.98 | 85.37 | 84.15 | 85.29 | 96.42 | 108.30 | 109.63 |
The cash conversion cycle of Danaher Corporation is a metric that measures how long it takes for the company to convert its investments in inventory and other resources into cash flows from sales. Over the observed periods from March 31, 2020, to December 31, 2024, the trend in Danaher's cash conversion cycle shows some fluctuations.
Initially, the company's cash conversion cycle was around 109.63 days on March 31, 2020, which then decreased to 85.29 days by December 31, 2020. This indicates an improvement in the efficiency of Danaher's working capital management as it took fewer days to convert its invested resources into cash.
Subsequently, the cycle slightly increased on March 31, 2021, to 84.15 days but remained relatively stable until June 30, 2022, fluctuating around the 90-100 day range. However, from September 30, 2022, to September 30, 2024, there was an upward trend in the cash conversion cycle, reaching its peak of 120.81 days on September 30, 2024.
This increase in the cash conversion cycle suggests a lengthening period for Danaher to convert its investments into cash, which could be due to changes in inventory levels, accounts receivable management, or payment terms with suppliers. It is essential for the company to monitor and manage its cash conversion cycle effectively to ensure optimal working capital efficiency and liquidity.