Gates Industrial Corporation plc (GTES)

Liquidity ratios

Dec 31, 2024 Sep 30, 2024 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
Current ratio 3.20 3.02 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
Quick ratio 1.99 1.82 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
Cash ratio 0.95 0.72 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

The liquidity ratios of Gates Industrial Corporation plc indicate a stable liquidity position over the period under review.

The current ratio, which measures the company's ability to meet short-term obligations with its current assets, improved from 2.99 as of March 31, 2020, to 3.20 as of December 31, 2024. This suggests that the company has more than enough current assets to cover its current liabilities, providing a cushion for potential financial challenges.

The quick ratio, also known as the acid-test ratio, considers only the most liquid assets (cash, marketable securities, and receivables) in relation to current liabilities. Despite some fluctuations, the quick ratio generally increased from 0.94 on March 31, 2020, to 1.99 on December 31, 2024. This indicates an improvement in the company's ability to meet its short-term obligations without relying on potentially slower-moving inventory.

The cash ratio, which is the most conservative measure of liquidity as it considers only cash and cash equivalents relative to current liabilities, also showed a positive trend. From 0.94 on March 31, 2020, the cash ratio increased to 0.95 by December 31, 2024, suggesting that Gates Industrial Corporation plc has a sufficient level of cash to cover its immediate liabilities.

Overall, the company's liquidity ratios reflect a healthy financial position, with a consistently strong ability to meet short-term obligations across the period analyzed.

Additional liquidity measure

Dec 31, 2024 Sep 30, 2024 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
Cash conversion cycle days 128.15 144.89 134.37 124.88 112.92 121.37 120.72 105.16 113.94 111.40 114.35 119.83 106.48 113.15 106.59 106.34 105.50 102.61 103.10 92.99

The cash conversion cycle of Gates Industrial Corporation plc has fluctuated over the analyzed period. It stood at 92.99 days as of March 31, 2020, increased to 134.37 days by June 30, 2024, before decreasing to 128.15 days by December 31, 2024. This cycle reflects the time taken by the company to convert its investments in inventory and other resources into cash flows from sales to customers, then back into cash through the collection of accounts receivable.

A higher cash conversion cycle indicates longer periods between spending cash to produce goods or services and receiving cash from sales. This may suggest inefficiencies in inventory management, slow collection of accounts receivable, or extended payment periods from customers. On the other hand, a lower cycle suggests the company is more efficient in managing its working capital, leading to quicker cash generation.

In the case of Gates Industrial Corporation plc, the increasing trend from June 2020 to March 2023 indicates potential challenges in managing working capital efficiently. However, the decrease observed towards the end of the analyzed period suggests some improvement in the company's cash conversion cycle. Monitoring this ratio over time can help assess the company's operational efficiency and liquidity management strategies.