Linde plc Ordinary Shares (LIN)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.80 | 0.79 | 0.74 | 0.80 | 0.85 |
| Quick ratio | 0.61 | 0.62 | 0.54 | 0.58 | 0.58 |
| Cash ratio | 0.31 | 0.34 | 0.21 | 0.27 | 0.23 |
Linde Plc.'s liquidity ratios have shown a fluctuating trend over the past five years. In terms of the current ratio, which measures the company's ability to cover its short-term obligations with its current assets, there has been a slight decrease from 0.85 in 2019 to 0.80 in 2023. This indicates that Linde's current assets may not be as sufficient to cover its current liabilities as effectively as before.
The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also exhibited a similar trend as the current ratio, hovering around 0.67 over the past three years. This suggests that Linde's ability to meet its short-term obligations using only its most liquid assets has remained relatively stable but still below the ideal ratio of 1 or above.
The cash ratio, which focuses solely on the most liquid assets (cash and cash equivalents) compared to current liabilities, has shown some volatility, ranging from 0.27 in 2021 to 0.38 in 2022. The decrease in 2023 to 0.36 indicates that Linde may have a lower ability to cover its short-term obligations with readily available cash compared to the previous year.
Overall, Linde Plc.'s liquidity ratios highlight a need for closer monitoring of the company's short-term financial health. Management may need to focus on improving the efficiency of current assets or securing additional sources of liquidity to better meet its short-term obligations and ensure financial stability.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 39.32 | 36.52 | 28.29 | 35.33 | 33.68 |
The cash conversion cycle for Linde Plc. has varied over the past five years. In 2023, the company's cash conversion cycle was 35.51 days, which represents an increase from the previous year's 33.25 days. This indicates that it took longer for the company to convert its investments in inventory and accounts receivable into cash in the most recent fiscal year compared to the prior year.
Compared to 2021, where the cash conversion cycle was 18.82 days, there has been a significant increase in 2023. This suggests that the company experienced challenges in efficiently managing its working capital in the most recent year, which could potentially impact its liquidity position.
In 2020 and 2019, the cash conversion cycle was 26.91 days and 25.03 days, respectively. Both years show an improvement in the efficiency of Linde Plc.'s working capital management compared to the most recent year. This indicates that the company was able to convert its investments in inventory and accounts receivable into cash more effectively during those years.
Overall, the trend in Linde Plc.'s cash conversion cycle shows some fluctuations, with 2023 standing out as a year where the company took longer to convert its investments into cash. This highlights the importance of closely monitoring working capital management to ensure optimal liquidity and operational efficiency.