Fortive Corp (FTV)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.16 | 2.05 | 0.91 | 0.68 | 1.55 |
| Quick ratio | 0.79 | 1.59 | 0.61 | 0.47 | 1.31 |
| Cash ratio | 0.36 | 1.05 | 0.26 | 0.22 | 1.03 |
Fortive Corp's liquidity ratios have displayed fluctuations over the past five years. The current ratio, which measures the company's ability to cover short-term obligations with current assets, declined from 1.55 in 2020 to 0.68 in 2021, indicating a potential liquidity strain. However, there was a notable improvement to 2.05 in 2023 before settling at 1.16 in 2024.
The quick ratio, a more stringent measure of liquidity that excludes inventory, also exhibited variability. It decreased from 1.31 in 2020 to 0.47 in 2021, highlighting a potential difficulty in meeting immediate obligations. Subsequently, the ratio improved to 1.59 in 2023 but declined to 0.79 in 2024.
The cash ratio, which assesses the company's ability to cover current liabilities with cash and cash equivalents, showed a similar pattern of fluctuations. It dropped significantly from 1.03 in 2020 to 0.22 in 2021, suggesting a potential liquidity challenge. The ratio rebounded to 1.05 in 2023 but decreased to 0.36 in 2024.
Overall, the liquidity ratios of Fortive Corp indicate varying levels of liquidity strength over the five-year period, with improvements in certain years but also instances of decline. It is essential for the company to carefully manage its liquidity position to ensure it can meet its short-term obligations effectively.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 45.72 | 53.87 | 54.72 | 63.38 | 63.42 |
The cash conversion cycle for Fortive Corp has shown a decreasing trend over the past five years, indicating an improvement in the company's efficiency in managing its cash flow.
Starting at 63.42 days on December 31, 2020, the cycle decreased to 45.72 days by December 31, 2024. This suggests that the company has been able to reduce the time it takes to convert its investments in inventory and other resources into cash, thereby enhancing its liquidity position.
The declining trend in the cash conversion cycle indicates that Fortive Corp has been managing its working capital effectively, which can lead to lower financing costs and increased profitability. It also reflects the company's ability to operate efficiently and effectively in its industry.
Overall, the decreasing cash conversion cycle for Fortive Corp demonstrates its strong financial management and ability to generate cash flows from its operational activities.