Fortive Corp (FTV)

The liquidity ratios of Fortive Corp, namely the current ratio, quick ratio, and cash ratio, have shown some fluctuations over the five-year period from 2019 to 2023.

Starting with the current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, we can see a significant improvement from 2019 to 2020, followed by a decrease in 2021, a sharp increase in 2022, and a further increase in 2023. The current ratio has improved from 1.06 in 2019 to 2.05 in 2023, indicating that Fortive Corp's current assets are now more than double its current liabilities, suggesting a healthier liquidity position in the most recent year.

Moving on to the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, we observe a similar trend over the period. The quick ratio improved notably from 2019 to 2020, fluctuated in 2021 and 2022, and increased further in 2023. The quick ratio rose from 0.88 in 2019 to 1.75 in 2023, indicating that Fortive Corp has more liquid assets (excluding inventory) to cover its immediate liabilities in the latest year.

Lastly, the cash ratio, which is the most stringent liquidity ratio as it measures the company's ability to cover its short-term liabilities with only cash and cash equivalents, also shows a pattern of improvement from 2019 to 2023. The cash ratio increased steadily over the five-year period, suggesting that Fortive Corp has increased its cash reserves relative to its short-term obligations.

Overall, the liquidity ratios of Fortive Corp have strengthened over the years, with 2023 depicting the healthiest liquidity position among the years analyzed. This improvement indicates that the company is in a better position to meet its short-term financial commitments and operational needs.

---

Additional liquidity measure

The cash conversion cycle for Fortive Corp has shown a fluctuating trend over the past five years. In 2023, the company's cash conversion cycle improved slightly to 47.23 days from 47.26 days in 2022. This indicates that the company was able to convert its investments in inventory and accounts receivable into cash more efficiently in 2023.

Comparing to 2021 and 2020, there was a significant decrease in the cash conversion cycle by 10.04 days and 12.99 days respectively in 2023. This improvement suggests that Fortive Corp managed its working capital more effectively in 2023 compared to the previous two years.

Although the cash conversion cycle in 2019 was slightly lower than in 2023, the company was able to maintain a relatively stable performance in converting its assets into cash over the past five years.

Overall, the decreasing trend in the cash conversion cycle indicates that Fortive Corp has been successful in managing its liquidity and working capital efficiency over the years, leading to improved cash flow and financial performance.