Ingersoll Rand Inc (IR)

Ingersoll-Rand Inc's liquidity ratios show a slight decline over the five-year period from 2019 to 2023. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, decreased from 2.69 in 2019 to 2.22 in 2023. This suggests that the company may have slightly fewer short-term assets available to cover its current liabilities.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventories from current assets, also experienced a decline from 1.81 in 2019 to 1.67 in 2023. This indicates that the company's ability to meet its short-term obligations with its most liquid assets has weakened slightly over the years.

Furthermore, the cash ratio, which focuses solely on a company's ability to cover its current liabilities with cash and cash equivalents, decreased from 1.01 in 2019 to 0.99 in 2023. While still above 1, signaling that Ingersoll-Rand Inc has sufficient cash to cover its immediate obligations, this ratio has shown a downward trend.

Overall, the declining trend in Ingersoll-Rand Inc's liquidity ratios suggests a potential weakening in the company's short-term financial position and may warrant further investigation into its ability to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle for Ingersoll-Rand Inc has shown a fluctuating trend over the past five years, indicating varying efficiencies in managing its cash flow and working capital.

In 2019, the company had a relatively high cash conversion cycle of 110.91 days, suggesting a longer period between spending cash on production and receiving cash from sales. This could indicate potential inefficiencies in the company's operational processes and collection of accounts receivable.

However, in 2020, there was a slight increase in efficiency, with the cash conversion cycle decreasing to 102.02 days. This improvement may have been due to better working capital management practices or more streamlined operational activities.

The trend continued in 2021, with a further reduction in the cash conversion cycle to 88.39 days, indicating ongoing efforts to optimize working capital and cash flow processes within the company.

In 2022, there was a slight increase in the cash conversion cycle to 94.30 days, suggesting a potential slowdown in cash flow efficiency compared to the previous year. This could be attributed to changes in the company's working capital management strategies or external factors affecting cash flow.

Finally, in 2023, there was a slight improvement in the cash conversion cycle to 83.78 days, indicating a more efficient conversion of inventory to cash and collection of receivables. This positive trend may be a result of continued focus on working capital optimization and operational efficiency within the organization.

Overall, the fluctuating cash conversion cycle of Ingersoll-Rand Inc over the five-year period reflects the company's efforts to manage its cash flow and working capital effectively, with varying degrees of success in different years. Continued monitoring and analysis of this metric will be important for assessing the company's financial health and operational efficiency in the future.