Lincoln Electric Holdings Inc (LECO)

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 1.87 1.85 2.06 2.24 2.24 2.07 2.03 1.93 1.83 1.70 1.62 1.54 1.71 1.66 1.78 1.95 2.02 1.92 1.77 1.62
Quick ratio 0.43 0.42 0.35 0.50 0.52 0.42 0.27 0.24 0.23 0.17 0.17 0.17 1.06 0.22 0.27 0.39 0.47 0.29 0.25 0.25
Cash ratio 0.43 0.42 0.35 0.50 0.52 0.42 0.27 0.24 0.23 0.17 0.17 0.17 1.06 0.22 0.27 0.39 0.47 0.29 0.25 0.25

Lincoln Electric Holdings Inc's liquidity ratios show a mixed performance over the past few years.

- The current ratio has fluctuated, showing a generally positive trend from March 2020 to December 2023, indicating the company's ability to cover its short-term liabilities with its current assets. However, there was a slight decline in the current ratio from December 2023 to December 2024, but it still remains above 1, which is a good sign of liquidity.

- The quick ratio, reflecting a more stringent measure of liquidity, was quite low in the initial period but improved significantly by December 2021, indicating a better ability to meet short-term obligations without relying on inventory. There was some fluctuation in the quick ratio over the subsequent periods, but it generally stayed above 0.2, which is considered a decent level of liquidity.

- The cash ratio, which is the most conservative measure of liquidity, mirrored the performance of the quick ratio, showing an improvement by December 2021. The cash ratio remained relatively stable at a higher level compared to the quick ratio, indicating that the company had a reasonable amount of cash to cover its short-term obligations.

Overall, Lincoln Electric Holdings Inc's liquidity ratios demonstrate a satisfactory liquidity position, with the current and cash ratios consistently above 1 and the quick ratio generally at an acceptable level. The company has shown the ability to manage its short-term obligations effectively over the analyzed periods.

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 78.31 86.98 81.63 77.99 75.36 83.97 94.01 94.43 97.92 95.02 99.66 96.95 91.00 92.99 88.34 83.29 78.00 79.68 82.21 74.18

The cash conversion cycle (CCC) of Lincoln Electric Holdings Inc has shown fluctuations over the past few quarters. The CCC indicates how long it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

From March 31, 2020, to June 30, 2022, the CCC increased gradually from 74.18 days to 99.66 days, indicating a potential inefficiency in managing its working capital. However, from September 30, 2022, to December 31, 2024, the CCC fluctuated but generally trended downwards, with some quarters showing improvements in managing its cash conversion cycle.

The peak CCC of 99.66 days in June 30, 2022, might signal that Lincoln Electric Holdings Inc faced challenges in efficiently managing its working capital, which could impact its liquidity and cash flow position. Subsequently, the decrease to 78.31 days by December 31, 2024, may indicate efforts to streamline operations and improve working capital management.

Overall, Lincoln Electric Holdings Inc should continue monitoring its cash conversion cycle closely to ensure optimal efficiency in converting its investments into cash, which is crucial for maintaining liquidity and sustaining business operations effectively.