Eaton Corporation PLC (ETN)

Liquidity ratios

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Current ratio 1.51 1.45 1.53 1.50 1.38 1.28 0.97 0.99 1.04 1.27 1.10 1.51 1.56 1.49 1.50 1.75 1.70 1.72 1.83 1.47
Quick ratio 0.91 0.84 0.85 0.78 0.73 0.65 0.50 0.51 0.54 0.69 0.44 0.66 0.68 0.63 0.57 0.68 0.78 0.99 1.07 0.82
Cash ratio 0.34 0.25 0.20 0.09 0.09 0.08 0.07 0.06 0.08 0.11 0.06 0.20 0.19 0.13 0.09 0.08 0.12 0.18 0.18 0.08

Eaton Corporation plc's liquidity ratios have shown a general improvement over the quarters analyzed. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has been steadily increasing from Q1 2022 to Q4 2023, indicating a strengthening liquidity position. The current ratio ranged from 1.28 in Q3 2022 to 1.53 in Q2 2023, with Q4 2023 recording a ratio of 1.51.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also demonstrates an upward trend, increasing from 0.58 in Q2 2022 to 1.02 in Q4 2023. This suggests that Eaton Corporation plc has been increasingly able to cover its short-term liabilities with its most liquid assets.

Furthermore, the cash ratio, representing the company's ability to cover immediate liabilities with cash and cash equivalents, has shown improvement over the quarters, reaching 0.45 in Q4 2023. This indicates that the company has enhanced its ability to meet its short-term obligations using its readily available cash resources.

Overall, the trend in Eaton Corporation plc's liquidity ratios, including the current ratio, quick ratio, and cash ratio, reflects an improving ability to meet short-term financial obligations and implies a strengthened liquidity position for the company.

See also:

Eaton Corporation PLC Liquidity Ratios (Quarterly Data)

Additional liquidity measure

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Cash conversion cycle days 79.94 83.80 85.51 85.56 81.78 82.98 81.09 78.05 64.55 67.37 68.76 69.68 62.45 65.61 64.69 66.40 76.68 80.10 81.66 68.07

The cash conversion cycle of Eaton Corporation plc has shown a fluctuating trend over the past eight quarters. The cycle peaked in Q2 2023 at 84.92 days and was the lowest in Q1 2022 at 79.95 days. Generally, the company takes an average of around 81 to 84 days to convert its investments in inventory and other resources into cash generated from sales. This indicates that Eaton Corporation plc has a moderate efficiency in managing its working capital and converting its assets into cash flow. Further analysis may be required to understand the specific drivers behind the variations in the cash conversion cycle and to identify potential areas for improvement in working capital management.