Illinois Tool Works Inc (ITW)

Liquidity ratios

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Current ratio 1.36 1.33 1.41 1.84 2.52
Quick ratio 0.22 0.23 0.16 0.44 0.99
Cash ratio 0.22 0.23 0.16 0.44 0.99

Illinois Tool Works Inc's liquidity ratios have shown a general decline over the years, indicating potential challenges regarding the company's short-term financial health.

- The current ratio, which measures the company's ability to pay its short-term obligations with its current assets, decreased from 2.52 in 2020 to 1.36 in 2024. While a current ratio above 1 typically indicates good liquidity, the downward trend suggests a decreasing ability to cover short-term liabilities with current assets.

- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Illinois Tool Works Inc's quick ratio dropped significantly from 0.99 in 2020 to 0.22 in 2024, indicating a weakening ability to meet immediate obligations without relying on inventory.

- The cash ratio, which measures a company's ability to cover current liabilities with its cash and cash equivalents, showed a similar decline from 0.99 in 2020 to 0.22 in 2024. This decreasing trend raises concerns about the company's cash position and its ability to settle short-term obligations solely with cash on hand.

Overall, the decreasing trend in all three liquidity ratios suggests that Illinois Tool Works Inc may face challenges in meeting its short-term financial obligations and may need to closely monitor its liquidity position to ensure financial stability.


See also:

Illinois Tool Works Inc Liquidity Ratios


Additional liquidity measure

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash conversion cycle days 66.14 66.88 79.51 72.84 58.85

The cash conversion cycle of Illinois Tool Works Inc has shown a fluctuating trend over the past five years.

As of December 31, 2020, the company's cash conversion cycle was 58.85 days, indicating that it took approximately 58.85 days for the company to convert its investments in inventory and receivables into cash.

By December 31, 2021, the cash conversion cycle had increased to 72.84 days, suggesting a longer period for the company to convert its assets into cash.

The trend continued to rise, reaching 79.51 days by December 31, 2022, indicating a further delay in the company's cash conversion process.

The following year, by December 31, 2023, there was a slight improvement as the cash conversion cycle decreased to 66.88 days.

As of the most recent data available on December 31, 2024, the cash conversion cycle improved slightly again to 66.14 days.

Overall, the fluctuating trend in the cash conversion cycle of Illinois Tool Works Inc suggests varying efficiency in managing its cash flow and working capital over the years, which may require further analysis to identify underlying factors driving these changes.