General Dynamics Corporation (GD)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.37 | 1.44 | 1.37 | 1.43 | 1.35 |
| Quick ratio | 0.72 | 0.79 | 0.85 | 0.94 | 0.88 |
| Cash ratio | 0.10 | 0.12 | 0.08 | 0.12 | 0.18 |
General Dynamics Corporation's liquidity ratios show mixed performance over the past five years. The current ratio, a measure of short-term liquidity, has slightly fluctuated with a range between 1.35 to 1.44. This implies that General Dynamics has generally been able to cover its current liabilities with its current assets, although a higher current ratio would indicate a stronger liquidity position.
On the other hand, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has shown a declining trend from 0.94 in 2021 to 0.72 in 2024. This downward trend may raise some concerns about the company's ability to meet its short-term obligations without relying on selling inventory.
Furthermore, the cash ratio, which indicates the proportion of cash and cash equivalents to current liabilities, ranges between 0.08 to 0.18 over the same period. The decreasing trend in the cash ratio suggests that General Dynamics may have lower levels of cash on hand relative to its current liabilities, indicating a potential challenge in meeting immediate financial obligations solely with available cash resources.
Overall, while the current ratio for General Dynamics Corporation shows a stable liquidity position, the declining trend in the quick ratio and cash ratio warrants closer monitoring to ensure the company's ability to meet its short-term financial obligations efficiently and effectively.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 760.07 | 703.29 | 433.23 | 362.48 | 439.71 |
The cash conversion cycle of General Dynamics Corporation has exhibited fluctuations over the years. On December 31, 2020, the company's cash conversion cycle stood at 439.71 days, indicating a prolonged period between the outflow of cash for inventory and the inflow of cash from sales. By December 31, 2021, the cycle decreased to 362.48 days, suggesting an improvement in efficiency in managing working capital.
However, there was a notable increase in the cash conversion cycle by December 31, 2022, rising to 433.23 days, possibly indicating challenges in managing inventories or collecting receivables efficiently. The cycle further extended to 703.29 days by December 31, 2023, indicating a significant delay in converting investments in inventory and receivables into cash.
By the end of 2024, the cash conversion cycle reached 760.07 days, signifying a prolonged period in the company's cash conversion process. This prolonged cycle may suggest potential liquidity concerns or inefficiencies in managing working capital during that period.
Overall, the trend in General Dynamics Corporation's cash conversion cycle highlights the importance of closely monitoring working capital management to ensure optimal efficiency and liquidity in the company's operations.