GE Aerospace (GE)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.09 | 1.33 | 1.18 | 1.28 | 1.55 |
| Quick ratio | 0.67 | 0.94 | 0.75 | 0.83 | 0.97 |
| Cash ratio | 0.40 | 0.67 | 0.45 | 0.53 | 0.67 |
Based on the provided data for GE Aerospace, the liquidity ratios have shown a declining trend over the years from 2020 to 2024.
1. Current Ratio: The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has decreased from 1.55 in 2020 to 1.09 in 2024. Although the current ratio remains above 1, indicating that the company can meet its current liabilities with its current assets, the decreasing trend suggests a potential weakening liquidity position.
2. Quick Ratio: The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also exhibited a declining trend from 0.97 in 2020 to 0.67 in 2024. This indicates a reduction in the company's ability to meet its short-term obligations without relying on the sale of inventory, which can be a cause for concern.
3. Cash Ratio: The cash ratio, which assesses the company's ability to cover its current liabilities with only cash and cash equivalents, has shown a decrease from 0.67 in 2020 to 0.40 in 2024. This downward trend indicates a decreasing capacity to settle short-term obligations with readily available cash, which may pose liquidity challenges for the company.
Overall, the declining liquidity ratios of GE Aerospace suggest a potential strain on its ability to meet short-term financial obligations in the coming years. It is essential for the company to closely monitor and improve its liquidity position to ensure financial stability and sustainability.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 220.00 | 117.11 | 152.36 | 221.14 | 156.26 |
The cash conversion cycle of GE Aerospace has shown some fluctuations over the past five years.
As of December 31, 2020, the cash conversion cycle stood at 156.26 days, indicating the period it takes for the company to convert its investments in inventory and other resources back into cash. This suggests that GE Aerospace had a moderate efficiency in managing its working capital at the end of 2020.
However, by December 31, 2021, the cash conversion cycle increased significantly to 221.14 days. This longer cycle may imply that GE Aerospace faced challenges in efficiently managing its cash flow and working capital during that particular year.
In the following year, as of December 31, 2022, there was a notable improvement in the cash conversion cycle, decreasing to 152.36 days. This reduction may indicate that GE Aerospace implemented strategies to streamline its operations and enhance its cash conversion efficiency.
By December 31, 2023, the cash conversion cycle further decreased to 117.11 days, signaling a continued improvement in cash management. This shorter cycle suggests that GE Aerospace was able to convert its investments into cash more quickly, potentially leading to better liquidity and financial performance.
However, the cycle increased again by December 31, 2024, to 220.00 days, approaching the level seen in 2021. This upturn may raise concerns about the company's working capital management at the end of 2024.
Overall, the trend in GE Aerospace's cash conversion cycle indicates some fluctuations over the five-year period, with improvements in some years and setbacks in others. Continuous monitoring and optimization of working capital processes will be essential for the company to maintain a healthy cash conversion cycle and enhance its financial position.