Gates Industrial Corporation plc (GTES)

Liquidity ratios

Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019
Current ratio 3.11 3.06 3.08 2.97 2.97 3.19 3.03 2.97 2.91 2.80 2.66 2.64 2.52 2.64 2.63 3.13 3.11 2.99 2.98 3.20
Quick ratio 1.93 1.87 1.98 1.88 1.90 0.85 1.91 0.56 0.53 0.52 1.62 0.64 0.56 0.59 0.72 1.03 1.02 0.94 0.97 0.78
Cash ratio 0.80 0.74 0.96 0.76 0.76 0.85 0.81 0.56 0.53 0.52 0.77 0.64 0.56 0.59 0.72 1.03 1.02 0.94 0.97 0.78

Gates Industrial Corporation plc has shown a consistent and strong current ratio over the past two years, ranging from 2.80 to 3.19. This indicates the company's ability to cover its short-term obligations with its current assets. However, the quick ratio and cash ratio have been more volatile, with the quick ratio fluctuating between 0.53 and 1.98, and the cash ratio ranging from 0.52 to 0.96.

The quick ratio, measuring the company's ability to meet short-term obligations without relying on inventory, shows some inconsistency. Although it improved in the most recent quarter to 1.87, it had significant fluctuations in the past, dropping to as low as 0.53 in the same period. This indicates a possible issue with the company’s inventory management or liquidity.

Similarly, the cash ratio, reflecting the ability to cover short-term obligations with cash and cash equivalents, has shown variability over the same period, ranging from 0.53 to 0.96. The latest quarter's cash ratio of 0.74 is an improvement from the previous quarter, but it is important to note the fluctuations in this ratio over time.

In conclusion, while Gates Industrial Corporation plc has maintained a strong current ratio, indicating good liquidity position, the variability in the quick ratio and cash ratio suggests that the company may have faced challenges in managing its short-term liquidity efficiently. Further analysis and monitoring of these ratios will be crucial to assess the company's liquidity position accurately.

Additional liquidity measure

Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019
Cash conversion cycle days 134.37 124.88 112.92 121.37 120.72 105.16 113.94 111.40 114.35 119.83 106.48 113.15 106.59 106.34 105.50 102.61 103.10 92.99 89.18 94.45

The trend in Gates Industrial Corporation plc's cash conversion cycle over the past several reporting periods shows some fluctuations. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources to cash flow from sales.

The average cash conversion cycle over the periods seems to have increased slightly, from around 100 days in 2019 to approximately 120 days in 2024. This indicates that the company may be taking longer to convert its investments in inventory and other resources into cash.

A longer cash conversion cycle can have implications for the company's working capital management and liquidity. It may suggest challenges in managing inventory levels, collections from customers, or extending payables to suppliers.

It would be important for Gates Industrial Corporation plc to focus on optimizing its cash conversion cycle to improve operational efficiency and maintain healthy liquidity levels. This could involve streamlining inventory management, improving receivables collection processes, and negotiating favorable payment terms with suppliers.