Lear Corporation (LEA)
Liquidity ratios
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.35 | 1.36 | 1.36 | 1.35 | 1.35 | 1.33 | 1.33 | 1.36 | 1.42 | 1.33 | 1.41 | 1.36 | 1.33 | 1.31 | 1.26 | 1.29 | 1.37 | 1.35 | 1.34 | 1.34 |
| Quick ratio | 0.86 | 0.88 | 0.89 | 0.16 | 0.88 | 0.16 | 0.17 | 0.23 | 0.92 | 0.22 | 0.29 | 0.27 | 0.26 | 0.25 | 0.37 | 0.46 | 0.32 | 0.27 | 0.26 | 0.25 |
| Cash ratio | 0.21 | 0.17 | 0.16 | 0.16 | 0.22 | 0.16 | 0.17 | 0.23 | 0.28 | 0.22 | 0.29 | 0.27 | 0.26 | 0.25 | 0.37 | 0.46 | 0.32 | 0.27 | 0.26 | 0.25 |
Lear Corp.'s liquidity ratios indicate the company's ability to meet its short-term obligations effectively. The current ratio has remained relatively stable around 1.35 to 1.36 throughout the past few quarters, indicating that Lear Corp. has sufficient current assets to cover its current liabilities. However, the current ratio is slightly above 1, suggesting potential liquidity challenges if current liabilities suddenly became due.
The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has also been consistent around 1.04 to 1.06. This indicates that Lear Corp. may face minor difficulties in meeting its short-term obligations without relying on the sale of inventory.
The cash ratio, which is the most stringent measure of liquidity, has shown a slight decline from 0.40 in Q1 2022 to 0.39 in Q4 2023. This downward trend suggests that Lear Corp.'s ability to meet its current liabilities solely with cash and cash equivalents has weakened slightly over time.
Overall, Lear Corp. appears to have reasonably adequate liquidity levels, as indicated by the stable current and quick ratios. However, the declining trend in the cash ratio may warrant closer attention to ensure the company maintains a strong cash position to meet its short-term obligations.
Additional liquidity measure
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 1.38 | 3.69 | 2.31 | -33.66 | 0.37 | -30.82 | -28.59 | -30.52 | 1.41 | -29.13 | -49.16 | -77.98 | -90.19 | -51.97 | -14.72 | -23.43 | -30.23 | -32.95 | -35.43 | -36.07 |
The cash conversion cycle of Lear Corp. has exhibited some fluctuation over the past eight quarters. The trend shows an overall increase in the time it takes for the company to convert its investments in inventory and other resources into cash inflows from sales.
In Q1 2022, the cash conversion cycle was at its lowest point for the period at 95.28 days. However, it increased in the subsequent quarters, reaching a peak in Q2 2023 at 99.08 days before slightly decreasing in Q4 2023 to 86.75 days.
The longer cash conversion cycle indicates that Lear Corp. is taking more time to turn its investments into cash, potentially facing challenges in managing inventory, collecting receivables, or delaying payment to suppliers. This could impact the company's liquidity and working capital management.
Overall, Lear Corp. should focus on improving efficiency in managing its cash conversion cycle to enhance its financial performance and ensure optimal utilization of resources.