Lockheed Martin Corporation (LMT)

Lockheed Martin Corporation's liquidity ratios show mixed performance over the analyzed periods. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, fluctuated between 1.13 and 1.42. While the ratio generally stayed above 1, indicating a healthy liquidity position, there were some quarters where it dropped significantly, suggesting potential challenges in meeting short-term obligations.

The quick ratio, a more stringent measure of liquidity as it excludes inventory from current assets, ranged from 0.09 to 0.40. The ratio showed significant variability, indicating fluctuations in the company's ability to meet short-term liabilities without relying on inventory.

The cash ratio, representing the proportion of cash and cash equivalents to current liabilities, mirrored the quick ratio's trend, ranging from 0.09 to 0.40. This ratio provides insight into the company's ability to pay off its short-term liabilities solely with cash on hand.

Overall, while Lockheed Martin Corporation generally maintained a current ratio above 1, suggesting adequate liquidity in most quarters, the fluctuations in the quick ratio and cash ratio highlight potential challenges in managing short-term obligations without relying on inventory or other assets. Monitoring these ratios closely can provide valuable insights into the company's liquidity position and ability to meet financial obligations.

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See also:

Lockheed Martin Corporation Liquidity Ratios (Quarterly Data)

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Additional liquidity measure

The cash conversion cycle of Lockheed Martin Corporation has shown a general trend of improvement over the last few years. The company's cash conversion cycle, which represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales, decreased from 24.44 days as of March 31, 2020, to 18.83 days as of September 30, 2024.

A decreasing cash conversion cycle suggests that Lockheed Martin has been able to manage its working capital more efficiently, potentially improving its liquidity position. The company has been able to reduce the time it takes to convert its resources into cash, indicating effective management of inventory, accounts receivable, and accounts payable.

However, there were some fluctuations in the cash conversion cycle during the period under review, with slight increases and decreases observed in certain quarters. It is important for the company to continue monitoring and managing its working capital effectively to sustain this trend of improvement in the cash conversion cycle.

Overall, the downward trend in Lockheed Martin's cash conversion cycle indicates that the company has been successful in streamlining its operations and optimizing its working capital management, which can have positive implications for its financial performance and overall efficiency.