Lockheed Martin Corporation (LMT)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.21 | 1.32 | 1.42 | 1.39 | 1.22 |
| Quick ratio | 0.21 | 0.32 | 0.40 | 0.37 | 0.28 |
| Cash ratio | 0.09 | 0.16 | 0.26 | 0.23 | 0.11 |
Lockheed Martin Corp.'s liquidity ratios indicate its ability to meet short-term obligations. The current ratio, which measures current assets against current liabilities, decreased from 1.42 in 2021 to 1.21 in 2023. This may suggest a slight reduction in the company's short-term liquidity. The quick ratio, which excludes inventory from current assets, also exhibited a decreasing trend, declining from 1.20 in 2021 to 1.03 in 2023. This may indicate a potential weakness in the company's ability to quickly cover its short-term liabilities without relying on inventory.
Furthermore, the cash ratio, which assesses the proportion of current liabilities that can be covered by cash and cash equivalents, decreased from 1.06 in 2021 to 0.90 in 2023. This downward trend implies a reduced ability to pay off short-term obligations using only cash and cash equivalents. Overall, the declining trend in all three liquidity ratios suggests the need for Lockheed Martin Corp. to carefully manage its short-term liquidity and ensure its ability to meet immediate financial obligations.
See also:
Lockheed Martin Corporation Liquidity Ratios
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 16.58 | 20.00 | 24.54 | 28.18 | 30.85 |
The cash conversion cycle of Lockheed Martin Corp. has shown a declining trend over the past five years, indicating an improvement in the company's efficiency in managing its working capital. The cycle decreased from 30.85 days in 2019 to 16.59 days in 2023. This suggests that the company has been able to more efficiently convert its investments in inventory and receivables into cash within a shorter timeframe. A shorter cash conversion cycle is generally a positive indicator, as it reflects the company's ability to generate cash and efficiently manage its operating cycle. It may also suggest that the company has been able to streamline its production and collection processes, leading to improved liquidity and potentially reduced reliance on external financing. This trend in the cash conversion cycle demonstrates Lockheed Martin's effective management of its working capital over the past five years.