Eaton Corporation PLC (ETN)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 488,000 | 294,000 | 297,000 | 438,000 | 370,000 |
| Short-term investments | US$ in thousands | 2,121,000 | 261,000 | 271,000 | 664,000 | 221,000 |
| Total current liabilities | US$ in thousands | 7,747,000 | 6,360,000 | 7,212,000 | 5,881,000 | 5,132,000 |
| Cash ratio | 0.34 | 0.09 | 0.08 | 0.19 | 0.12 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($488,000K
+ $2,121,000K)
÷ $7,747,000K
= 0.34
The cash ratio of Eaton Corporation plc has shown fluctuations over the past five years, ranging from 0.17 in 2021 to 0.45 in 2023. The cash ratio measures the company's ability to cover its short-term liabilities with its cash and cash equivalents. A higher cash ratio indicates a stronger ability to meet short-term obligations without relying on external sources of financing.
In 2023, the cash ratio improved significantly to 0.45, suggesting that Eaton Corporation plc had a higher level of cash and cash equivalents relative to its short-term liabilities, which is a positive sign for liquidity and financial stability. This may indicate effective cash management practices or increased cash reserves on hand.
In contrast, the cash ratio was lower in 2022 at 0.19, indicating that the company had a lower proportion of cash to cover its short-term obligations. However, it improved from 0.17 in 2021, showing some progress in managing liquidity compared to the previous year.
Overall, while the cash ratio has fluctuated in recent years, the significant improvement in 2023 suggests a stronger liquidity position for Eaton Corporation plc, which may enhance its ability to meet financial obligations in the short term. It is important for the company to continue monitoring and managing its cash position to ensure adequate liquidity for future operations and contingencies.
Peer comparison
Dec 31, 2023