Illinois Tool Works Inc (ITW)

Cash ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash and cash equivalents	US$ in thousands	948,000	1,065,000	708,000	1,527,000	2,564,000
Short-term investments	US$ in thousands	—	—	—	—	—
Total current liabilities	US$ in thousands	4,308,000	4,675,000	4,460,000	3,470,000	2,589,000
Cash ratio		0.22	0.23	0.16	0.44	0.99

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($948,000K + $—K) ÷ $4,308,000K
= 0.22

The cash ratio of Illinois Tool Works Inc has displayed a declining trend over the past five years. Starting at a healthy level of 0.99 in December 31, 2020, the ratio fell to 0.44 by December 31, 2021. This significant drop suggests a decrease in the company's ability to cover its short-term liabilities with its available cash resources.

Further, the ratio continued its downward trajectory, reaching 0.16 by the end of December 31, 2022, indicating a further deterioration in the company's liquidity position. Although there was a slight improvement to 0.23 by December 31, 2023, the ratio remained relatively low compared to the initial level.

By the end of December 31, 2024, the cash ratio stood at 0.22, still below the starting point in 2020. This suggests that Illinois Tool Works Inc may be facing challenges in maintaining sufficient liquid assets to meet its short-term obligations. It is essential for the company to closely monitor its liquidity position and take necessary steps to ensure it can meet its financial commitments in a timely manner.