Johnson Controls International PLC (JCI)

Liquidity ratios

Sep 30, 2024 Sep 30, 2023 Sep 30, 2022 Sep 30, 2021 Sep 30, 2020
Current ratio 0.94 0.97 1.04 1.10 1.22
Quick ratio 0.57 0.62 0.70 0.90 0.92
Cash ratio 0.05 0.08 0.18 0.26 0.24

Johnson Controls International PLC's liquidity ratios have shown a downward trend over the past five years. The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, has decreased from 1.22 in 2020 to 0.94 in 2024. This indicates a decline in the company's short-term liquidity position, as there are fewer current assets available to cover current liabilities.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also decreased from 0.92 in 2020 to 0.57 in 2024. This suggests that the company may face challenges in meeting its short-term liabilities without relying on inventory, which may not be easily convertible to cash.

The cash ratio, the most conservative measure of liquidity that assesses the company's ability to cover current liabilities solely with cash and cash equivalents, has also shown a decreasing trend from 0.24 in 2020 to 0.05 in 2024. This indicates a significant reduction in the company's cash reserves relative to its short-term obligations.

Overall, the declining trend in Johnson Controls International PLC's liquidity ratios raises concerns about its ability to meet its short-term financial obligations. The management should closely monitor and manage its working capital to improve liquidity and ensure the company's financial stability in the future.


See also:

Johnson Controls International PLC Liquidity Ratios


Additional liquidity measure

Sep 30, 2024 Sep 30, 2023 Sep 30, 2022 Sep 30, 2021 Sep 30, 2020
Cash conversion cycle days 70.82 59.96 58.57 60.32 69.53

The cash conversion cycle of Johnson Controls International PLC has shown variability over the past five years, ranging from 58.57 days to 70.82 days. In 2024, the cash conversion cycle increased to 70.82 days from 59.96 days in 2023. This indicates that the company took longer to convert its investments in inventory into cash during the year.

Comparing 2024 to 2020, the cash conversion cycle has improved by almost 1 day. However, it is important to note that a shorter cash conversion cycle is generally preferred as it signifies that the company is able to convert its inventory investments into cash more quickly, thereby improving liquidity and efficiency in managing working capital.

Overall, the trend in Johnson Controls International PLC's cash conversion cycle suggests that the company has been relatively stable in managing its working capital efficiency over the past five years, with some fluctuations observed between years. Further analysis and comparison to industry benchmarks could provide additional insights into the company's operational performance and efficiency in managing its working capital.