ITT Inc (ITT)

The liquidity ratios of ITT Inc have shown some fluctuations 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 1.55 to 2.20, with the highest value recorded in 2020. A current ratio above 1 indicates that ITT Inc has more current assets than current liabilities, providing a comfortable buffer for meeting its short-term financial commitments.

The quick ratio, also known as the acid-test ratio, excludes inventory from current assets to provide a more stringent measure of liquidity. ITT Inc's quick ratio has fluctuated between 1.10 and 1.79, with the lowest value observed in 2022. This indicates that the company may have slightly less immediate liquidity when excluding inventory from the calculation.

The cash ratio, which focuses on the most liquid current assets (cash and cash equivalents) relative to current liabilities, has varied between 0.57 and 1.20. A cash ratio below 1 suggests that ITT Inc may not have sufficient cash on hand to cover its short-term obligations, with the lowest value seen in 2023.

Overall, while ITT Inc has maintained current ratios above 1, indicating a generally healthy liquidity position, the downward trend in quick and cash ratios over the years may suggest a potential need for the company to closely monitor its liquidity management to ensure it can meet its short-term financial obligations efficiently.

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Additional liquidity measure

The cash conversion cycle of ITT Inc has shown some fluctuations over the past five years. In 2023, the cash conversion cycle increased to 98.29 days from 100.29 days in 2022, indicating a slight improvement in the company's efficiency in managing its working capital. However, the cycle remains longer compared to the levels seen in 2021, where it was 84.53 days.

Despite the fluctuations, ITT Inc's cash conversion cycle has generally remained within a relatively stable range over the past five years. This suggests that the company has been able to effectively manage its accounts receivable, inventory, and accounts payable to optimize its cash flow and working capital efficiency.

Overall, while there have been some variations in the cash conversion cycle of ITT Inc, the company's ability to maintain a consistent level of efficiency in converting its investments in inventory and receivables into cash indicates sound working capital management practices.