Honeywell International Inc (HON)

Quick ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash	US$ in thousands	10,567,000	7,925,000	9,627,000	10,959,000	14,275,000
Short-term investments	US$ in thousands	386,000	170,000	483,000	564,000	945,000
Receivables	US$ in thousands	—	—	—	—	—
Total current liabilities	US$ in thousands	152,000	18,539,000	19,938,000	19,508,000	19,197,000
Quick ratio		72.06	0.44	0.51	0.59	0.79

December 31, 2024 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($10,567,000K + $386,000K + $—K) ÷ $152,000K
= 72.06

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations using its most liquid assets. It is calculated as (Current Assets - Inventory) / Current Liabilities.

Analyzing the quick ratio of Honeywell International Inc over the years provided, we observe a declining trend. In December 31, 2020, the quick ratio was 0.79, indicating that the company had $0.79 in liquid assets available to cover each dollar of current liabilities. However, this ratio decreased to 0.59 in December 31, 2021, and further dropped to 0.51 in December 31, 2022, signaling a potential strain on the company's ability to meet its short-term obligations without relying on inventory.

In December 31, 2023, the quick ratio decreased even more to 0.44, indicating a higher reliance on inventory to cover current liabilities, which may pose a liquidity risk. Interestingly, in December 31, 2024, the quick ratio spikes to an unusually high value of 72.06. This significant increase could be due to an irregularity in the financial data or a unique event that impacted the current asset composition.

Overall, the decreasing trend in the quick ratio raises concerns about Honeywell International Inc's short-term liquidity position. It suggests the need for the company to manage its liquid assets more effectively to ensure it can comfortably meet its current obligations in the future.