Eaton Corporation PLC (ETN)
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 | 1.50 | 1.53 | 1.56 | 1.56 | 1.51 | 1.45 | 1.53 | 1.50 | 1.37 | 1.28 | 0.97 | 0.99 | 1.04 | 1.27 | 1.10 | 1.51 | 1.55 | 1.49 | 1.50 | 1.75 |
| Quick ratio | 0.26 | 0.25 | 0.34 | 0.32 | 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 |
| Cash ratio | 0.26 | 0.25 | 0.34 | 0.32 | 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 |
The current ratio of Eaton Corporation PLC has shown some fluctuations over the past few years, starting at 1.75 in March 2020, declining to a low of 0.97 in June 2022, and then recovering to 1.56 by June 2024. This ratio indicates the company's ability to cover its short-term liabilities with its current assets.
The quick ratio, which measures the company's ability to meet its short-term obligations with its most liquid assets, has also displayed variability during the same period. It started at a low of 0.08 in March 2020, increased to 0.34 by December 2023, and then decreased slightly to 0.26 by December 2024.
The cash ratio, which specifically focuses on the company's ability to cover its current liabilities with only cash and cash equivalents, has followed a similar pattern to the quick ratio. It began at 0.08 in March 2020, peaked at 0.34 by December 2023, and then dipped to 0.26 by December 2024.
Overall, while Eaton Corporation PLC has experienced some fluctuations in its liquidity ratios over the years, the company seems to have maintained a generally healthy liquidity position, with current assets generally being sufficient to cover short-term obligations. Investors and stakeholders may want to keep an eye on future trends in these ratios to assess the company's ability to meet its financial obligations in the near term.
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 | 100.34 | 100.39 | 96.59 | 95.52 | 93.12 | 92.97 | 92.78 | 92.66 | 90.29 | 92.38 | 94.27 | 90.50 | 81.52 | 77.22 | 75.15 | 71.25 | 62.04 | 59.83 | 58.91 | 60.87 |
The cash conversion cycle of Eaton Corporation PLC has shown a gradual increase over the years, indicating potential inefficiencies in managing its cash, inventory, and receivables. The cycle started at around 60-62 days in 2020 and has steadily increased to approximately 100 days by the end of 2024.
A longer cash conversion cycle suggests that Eaton Corporation is taking more time to convert its investments in inventory and receivables into cash. This could potentially strain its liquidity position and working capital management.
Management should focus on streamlining its operations, improving inventory turnover, and managing its receivables more efficiently to reduce the cash conversion cycle. By doing so, Eaton can free up cash flow, improve its overall financial health, and enhance its ability to invest in growth opportunities.