Ecolab Inc (ECL)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.30 | 1.30 | 1.32 | 1.75 | 1.33 |
| Quick ratio | 0.91 | 0.83 | 0.84 | 1.26 | 0.86 |
| Cash ratio | 0.21 | 0.14 | 0.10 | 0.43 | 0.05 |
Ecolab, Inc.'s liquidity ratios provide insights into the company's ability to meet its short-term obligations. The current ratio has remained relatively stable over the past five years, ranging from 1.30 to 1.75. This indicates that Ecolab has adequate current assets to cover its current liabilities, with the ratio being above 1 in all years, signaling a generally healthy liquidity position.
In terms of quick ratio, it has exhibited more variability compared to the current ratio, fluctuating between 0.88 to 1.31 over the same period. The quick ratio paints a slightly more conservative picture of Ecolab's liquidity, as it excludes inventory from current assets. A decreasing trend in the quick ratio may suggest potential issues with inventory management or a reduction in liquid assets relative to current liabilities.
The cash ratio, which provides the most stringent measure of liquidity by focusing solely on cash and cash equivalents, also shows variation over the years. Ecolab's cash ratio ranges from 0.11 to 0.47, indicating that the company's cash reserves relative to current liabilities have fluctuated. A higher cash ratio is generally preferred as it suggests a stronger ability to cover short-term obligations with cash on hand.
Overall, Ecolab's liquidity ratios indicate a mixed picture with some fluctuations, but the company has generally maintained a sound liquidity position over the years, albeit with some variations in the individual ratios. It is essential for stakeholders to monitor these ratios closely to ensure that Ecolab can continue to meet its short-term financial commitments.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 69.35 | 74.89 | 77.98 | 80.12 | 70.85 |
The cash conversion cycle of Ecolab, Inc. has shown a decreasing trend over the past five years, indicating an improvement in the efficiency of the company's cash management. In 2023, the cash conversion cycle decreased to 69.22 days compared to 76.82 days in 2022, 80.54 days in 2021, 82.20 days in 2020, and 81.01 days in 2019.
A lower cash conversion cycle signifies that Ecolab is taking less time to convert its investments in inventory and other resources into cash from sales. This could be attributed to better inventory management, quicker collection of receivables, or more extended payment terms from suppliers.
Overall, the improving trend in the cash conversion cycle demonstrates Ecolab's ability to efficiently manage its working capital and generate cash flow. This efficiency is crucial for the company's liquidity, profitability, and overall financial health in the long run.