Hubbell Inc (HUBB)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.64 | 1.86 | 1.76 | 1.67 | 1.86 |
| Quick ratio | 0.86 | 1.10 | 0.91 | 0.87 | 1.04 |
| Cash ratio | 0.26 | 0.42 | 0.28 | 0.28 | 0.23 |
Hubbell Inc.'s liquidity ratios show the company's ability to meet its short-term obligations.
The current ratio, which measures the company's ability to pay off its short-term liabilities with its current assets, has decreased over the past five years from 1.86 in 2019 to 1.64 in 2023. While the current ratio still indicates that Hubbell Inc. has more than enough current assets to cover its short-term liabilities, the decreasing trend may warrant further investigation into the company's liquidity position.
The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Hubbell Inc.'s quick ratio has fluctuated over the years but generally trended downward from 1.11 in 2019 to 0.95 in 2023. A quick ratio below 1 suggests that the company may have difficulty meeting its short-term obligations without relying on inventory liquidation.
The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, shows a similar downward trend from 0.31 in 2019 to 0.36 in 2023. This indicates that Hubbell Inc. has a decreasing ability to cover its current liabilities solely with its cash reserves.
Overall, Hubbell Inc.'s liquidity ratios suggest a potential deterioration in the company's short-term financial health over the past few years. It is important for stakeholders to monitor these ratios closely to ensure that the company can meet its upcoming financial obligations without facing liquidity constraints.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 76.03 | 73.09 | 72.43 | 67.19 | 80.27 |
The cash conversion cycle of Hubbell Inc. has shown fluctuations over the last five years. In 2023, the cash conversion cycle increased to 81.57 days from 76.84 days in 2022, indicating a slight slowdown in the efficiency of converting resources into cash. This may suggest potential challenges in managing the company's cash flow and working capital in the most recent period.
Comparing the latest data to 2021, the cash conversion cycle also increased, further highlighting a trend of delayed cash conversion within the company. However, it is worth noting that the cycle in 2023 was lower than the levels seen in 2020 and 2019, which suggests some improvement over those previous years.
Overall, the trend in the cash conversion cycle for Hubbell Inc. indicates that the company may need to focus on optimizing its cash management processes to enhance efficiency in converting investments in inventory and receivables into cash. Further analysis of the underlying factors impacting the cash conversion cycle in each period would provide valuable insights into potential areas for improvement.