Illinois Tool Works Inc (ITW)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.36 | 1.36 | 1.30 | 1.32 | 1.33 | 1.58 | 1.59 | 1.20 | 1.41 | 1.41 | 1.48 | 1.73 | 1.84 | 2.20 | 2.20 | 2.50 | 2.52 | 2.37 | 2.75 | 2.71 |
| Quick ratio | 0.22 | 0.20 | 0.18 | 0.20 | 0.23 | 0.25 | 0.23 | 0.20 | 0.16 | 0.18 | 0.20 | 0.34 | 0.44 | 0.66 | 0.70 | 0.93 | 0.99 | 0.85 | 0.89 | 0.70 |
| Cash ratio | 0.22 | 0.20 | 0.18 | 0.20 | 0.23 | 0.25 | 0.23 | 0.20 | 0.16 | 0.18 | 0.20 | 0.34 | 0.44 | 0.66 | 0.70 | 0.93 | 0.99 | 0.85 | 0.89 | 0.70 |
Illinois Tool Works Inc's liquidity ratios have shown fluctuations over the reported periods.
The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has been gradually decreasing from 2.75 in June 2020 to 1.36 in December 2024. This trend indicates a potential weakening in the company's short-term liquidity position.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also followed a downward trajectory, dropping from 0.99 in December 2020 to 0.22 in December 2024. This suggests that Illinois Tool Works Inc may struggle to meet its short-term obligations using only the most liquid assets.
The cash ratio, which focuses solely on the company's ability to cover its current liabilities with cash and cash equivalents, has mirrored the trends seen in the quick ratio, declining from 0.99 in December 2020 to 0.22 in December 2024. This indicates a potential strain on the company's cash resources to fulfill immediate payment commitments.
Overall, the decreasing trends in these liquidity ratios signal a deteriorating short-term financial position for Illinois Tool Works Inc, highlighting potential challenges in meeting its upcoming obligations.
See also:
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 65.95 | 73.90 | 73.26 | 73.04 | 66.88 | 70.51 | 74.87 | 77.55 | 79.51 | 78.68 | 79.78 | 78.04 | 72.84 | 67.04 | 62.99 | 62.52 | 58.85 | 56.70 | 56.84 | 54.07 |
The cash conversion cycle (CCC) of Illinois Tool Works Inc has shown fluctuations over the period from March 31, 2020, to December 31, 2024. The CCC represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
From March 31, 2020, to September 30, 2021, the CCC steadily increased from 54.07 days to 67.04 days, indicating a lengthening of the time the company took to convert its resources into cash. This could suggest potential inefficiencies in managing working capital during this period.
From September 30, 2021, to December 31, 2024, the CCC fluctuated within a range, with occasional peaks and declines. Notably, the CCC peaked at 79.78 days on June 30, 2022, and decreased to 65.95 days on December 31, 2024. These fluctuations could indicate varying levels of efficiency in inventory management, accounts receivable collection, and payables management during different quarters.
Overall, a CCC below industry averages indicates efficient management of working capital, while a prolonged CCC may suggest liquidity and operational challenges. Illinois Tool Works Inc should continue monitoring its CCC to ensure optimal management of its cash conversion process and working capital efficiency.