Motorola Solutions Inc (MSI)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.28 | 1.00 | 1.15 | 1.33 | 1.24 |
| Quick ratio | 0.42 | 0.30 | 0.29 | 0.46 | 0.40 |
| Cash ratio | 0.42 | 0.30 | 0.29 | 0.46 | 0.40 |
Based on the data provided, let's analyze the liquidity ratios of Motorola Solutions Inc:
1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term obligations with its short-term assets.
- Motorola Solutions Inc's current ratio has fluctuated over the years, with a high of 1.33 in 2021 and a low of 1.00 in 2023.
- A current ratio above 1 indicates that the company's current assets exceed its current liabilities, which is generally considered a healthy sign.
2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity as it excludes inventories from current assets.
- Motorola Solutions Inc's quick ratio has varied between 0.29 and 0.46 during the period.
- A quick ratio above 1 is preferred, as it shows that the company can meet its short-term obligations without relying on selling inventory.
3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, focusing only on the company's ability to cover current liabilities with cash and cash equivalents.
- Motorola Solutions Inc's cash ratio has remained consistent at around 0.40 to 0.46 across the years.
- A higher cash ratio indicates a stronger ability to cover short-term obligations purely with cash resources.
Overall, while Motorola Solutions Inc's liquidity ratios have shown some fluctuation, the company has generally maintained acceptable levels of liquidity throughout the years. The current, quick, and cash ratios provide insights into the company's ability to meet its short-term financial commitments and manage liquidity effectively. It is essential for the company to continue monitoring and managing its liquidity position to ensure financial stability and flexibility in the future.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 52.70 | 60.27 | 78.86 | 69.62 | 48.72 |
Based on the provided data, we can observe the trend in Motorola Solutions Inc's cash conversion cycle over the years. The cash conversion cycle represents the time it takes for the company to convert its investments in inventory and other resources into cash inflows from sales.
- As of December 31, 2020, the cash conversion cycle for Motorola Solutions Inc was 48.72 days, indicating that the company was able to efficiently manage its working capital and convert investments into cash relatively quickly.
- By December 31, 2021, the cash conversion cycle increased to 69.62 days, suggesting a potential slowdown in the company's ability to convert investments into cash, which may be due to factors such as a decrease in sales or an increase in inventory levels.
- The cash conversion cycle continued to increase to 78.86 days by December 31, 2022, indicating a further slowdown in the company's cash conversion efficiency. This prolonged cycle may raise concerns about working capital management and liquidity.
- However, by December 31, 2023, the cash conversion cycle decreased to 60.27 days, displaying a positive trend towards improved efficiency in converting investments into cash. The company may have implemented strategies to enhance working capital management during this period.
- As of December 31, 2024, the cash conversion cycle further decreased to 52.70 days, indicating a potential improvement in the company's operational efficiency and working capital management. A shorter cash conversion cycle suggests that the company is able to generate cash flow from its operations more swiftly.
In conclusion, analyzing Motorola Solutions Inc's cash conversion cycle reveals fluctuations over the years, with periods of both improvement and deterioration in cash conversion efficiency. It is essential for the company to continuously monitor and optimize its working capital management practices to ensure healthy cash flow and operational performance.