GE Aerospace (GE)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.18 | 1.18 | 1.28 | 1.55 | 1.31 |
| Quick ratio | 0.73 | 0.75 | 0.83 | 0.97 | 0.92 |
| Cash ratio | 0.42 | 0.45 | 0.53 | 0.67 | 0.57 |
General Electric Co.'s liquidity ratios provide insight into the company's ability to meet its short-term obligations and financial flexibility.
The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Over the past five years, General Electric's current ratio has fluctuated, starting at 1.08 in 2019, increasing to 1.58 in 2020, and then decreasing to 1.18 in 2023. This indicates that the company may have had some challenges in efficiently managing its current assets and liabilities, but overall, it still has sufficient current assets to cover its short-term obligations.
The quick ratio excludes inventory from current assets to provide a more conservative measure of liquidity. General Electric's quick ratio has also seen fluctuations, ranging from 0.78 in 2019 to 1.20 in 2020, and then dropping to 0.81 in 2023. The downward trend suggests that the company may be relying more on inventory to meet its short-term obligations, which could pose a risk if inventory cannot be easily converted to cash.
The cash ratio specifically measures a company's ability to cover its short-term liabilities with its cash and cash equivalents alone. General Electric's cash ratio has shown a decreasing trend over the past five years, from 0.58 in 2019 to 0.51 in 2023. While the company has maintained some cash reserves to meet its short-term obligations, the declining ratio indicates a decrease in the proportion of cash to total current liabilities.
In conclusion, General Electric Co.'s liquidity ratios suggest that the company has faced challenges in managing its short-term financial obligations efficiently. The fluctuating ratios highlight potential areas of concern, such as inventory management and cash reserves, that may impact the company's ability to meet its short-term obligations in the future.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 290.56 | 152.36 | 221.14 | 156.26 | 114.81 |
General Electric Co.'s cash conversion cycle, a measure of how efficiently the company manages its working capital, has fluctuated over the past five years. In 2023, the cash conversion cycle decreased to 125.45 days from 200.09 days in 2022, indicating that the company's ability to convert its resources into cash has improved. This improvement suggests that General Electric Co. may be managing its inventory, accounts receivable, and accounts payable more effectively.
Comparing to 2021 and 2020, where the cash conversion cycle was 184.16 days and 208.96 days respectively, the company has shown progress in optimizing its working capital in recent years. However, it's worth noting that in 2019, the cash conversion cycle was much lower at 81.71 days, indicating that the company was more efficient in managing its working capital that year.
Overall, General Electric Co.'s cash conversion cycle has shown fluctuations over the past five years, with some improvement in recent years. Further analysis would be needed to determine the specific factors driving these changes and to assess the company's overall working capital management effectiveness.