Honeywell International Inc (HON)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.27 | 1.25 | 1.30 | 1.47 | 1.34 |
| Quick ratio | 0.84 | 0.88 | 0.94 | 1.15 | 0.99 |
| Cash ratio | 0.44 | 0.51 | 0.59 | 0.79 | 0.58 |
The liquidity ratios of Honeywell International Inc have shown some fluctuation over the past five years.
The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has ranged from 1.25 to 1.47. A current ratio above 1 indicates that the company has more current assets than current liabilities, suggesting a strong ability to cover its short-term debts. The current ratio has remained above 1 over the years, indicating that Honeywell has maintained a healthy liquidity position, although it slightly decreased in 2023 compared to the previous years.
The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Honeywell's quick ratio has ranged from 0.93 to 1.23, indicating a decreasing trend over the years. A quick ratio above 1 suggests that the company can cover its short-term liabilities without relying on inventory sales. While Honeywell's quick ratio has generally been above 1, the decreasing trend may warrant further attention, especially if the downward trend continues.
The cash ratio, which is the most stringent measure of liquidity and indicates the company's ability to cover its current liabilities with cash and cash equivalents, has fluctuated between 0.53 and 0.88. A cash ratio below 1 may suggest that the company relies more on non-cash current assets to meet its short-term obligations. Honeywell's cash ratio has been below 1, indicating a reliance on other current assets in addition to cash to cover its short-term obligations.
Overall, Honeywell International Inc has maintained a generally healthy liquidity position over the past five years, as indicated by its current ratio remaining above 1. However, the decreasing trend in the quick ratio and cash ratio over some years raises some concerns, suggesting a potential need for closer monitoring of the company's ability to meet its short-term obligations.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 66.54 | 67.06 | 55.69 | 59.79 | 58.61 |
The cash conversion cycle for Honeywell International Inc has shown some variation over the past five years. In 2023, the company's cash conversion cycle was 64.32 days, slightly lower than the 64.45 days in 2022. This indicates that the company took slightly less time to convert its investments in inventory into cash in 2023 compared to the previous year.
However, when looking at a longer trend, the cash conversion cycle in 2023 is higher than the 51.49 days reported in 2021, 55.59 days in 2020, and 54.87 days in 2019. This suggests that in recent years, Honeywell International Inc has been taking longer to convert its investments in inventory into cash, which could potentially impact its liquidity and working capital management.
Overall, it is important for the company to closely monitor its cash conversion cycle to ensure efficient working capital management and optimize the timing of cash inflows and outflows.