L3Harris Technologies Inc (LHX)
Liquidity ratios
| 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 | Sep 30, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.04 | 0.90 | 0.98 | 1.01 | 0.88 | 1.09 | 1.14 | 1.17 | 1.10 | 1.27 | 1.32 | 1.40 | 1.54 | 1.70 | 1.78 | 1.57 | 1.37 | 1.51 | 1.41 | 1.49 |
| Quick ratio | 0.24 | 0.20 | 0.20 | 1.05 | 1.07 | 1.08 | 1.12 | 1.18 | 1.10 | 0.09 | 0.08 | 1.52 | 0.26 | 0.45 | 0.49 | 0.62 | 0.53 | 0.67 | 0.38 | 0.48 |
| Cash ratio | 0.07 | 0.06 | 0.06 | 0.07 | 0.06 | 0.06 | 0.09 | 0.15 | 0.09 | 0.09 | 0.08 | 0.21 | 0.26 | 0.45 | 0.23 | 0.30 | 0.29 | 0.42 | 0.13 | 0.21 |
L3Harris Technologies Inc's liquidity ratios demonstrate fluctuations over the past five years. The current ratio, which measures short-term liquidity by comparing current assets to current liabilities, has shown a declining trend since 2020, dropping to 1.04 in September 2024 from a peak of 1.78 in March 2021. This indicates a decrease in the company's ability to cover its short-term obligations with its current assets.
The quick ratio, a more stringent measure of liquidity as it excludes inventory from current assets, has also experienced volatility, reaching a low of 0.08 in June 2022 and rising to 1.52 in March 2023. However, in recent quarters, the quick ratio has decreased to 0.20 in September 2024, signaling potential challenges in meeting immediate liabilities without relying on inventory.
The cash ratio, which shows the proportion of cash and cash equivalents to current liabilities, has displayed fluctuations as well. Although it improved significantly in 2021, with a peak of 0.45 in March 2021, the ratio has since declined to 0.06 in September 2024. This decrease suggests that the company may have less cash available to cover its current liabilities.
Overall, the decreasing trend in current and quick ratios, along with the fluctuating cash ratio, indicates potential liquidity challenges for L3Harris Technologies Inc. It may need to closely monitor and manage its liquidity position to ensure it can meet its short-term financial obligations effectively.
Additional liquidity measure
| 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 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 12.52 | 13.82 | 10.51 | 139.58 | 161.37 | 123.89 | 124.19 | 114.38 | 114.19 | -11.01 | -14.03 | 105.61 | -7.22 | -6.47 | 16.77 | 22.24 | 16.26 | 21.28 | 22.44 | 43.74 |
The cash conversion cycle of L3Harris Technologies Inc has shown fluctuations over the various reporting periods. The cash conversion cycle represents the number of days it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle is generally preferred as it indicates more efficient management of working capital.
The company's cash conversion cycle ranged from -14.03 days to 161.37 days over the past few years. A negative cash conversion cycle, as seen in some periods, indicates that the company is able to collect cash from customers before paying its suppliers, resulting in a favorable position in terms of working capital efficiency.
However, in certain periods, such as December 31, 2023, and September 30, 2023, the cash conversion cycle was significantly longer, indicating a potential issue with working capital management. During these periods, the company may have faced challenges in efficiently converting its investments into cash, potentially leading to a strain on liquidity.
It is essential for L3Harris Technologies Inc to monitor and manage its cash conversion cycle effectively to ensure optimal working capital performance and maintain financial stability. Analysis of the factors influencing the cycle, such as inventory management, accounts receivable, and accounts payable, can help the company improve its working capital efficiency and overall financial health.