nVent Electric PLC (NVT)
Quick ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 131,200 | 185,100 | 297,500 | 49,500 | 122,500 |
| Short-term investments | US$ in thousands | 0 | — | — | — | — |
| Receivables | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 801,600 | 733,600 | 649,500 | 636,300 | 450,000 |
| Quick ratio | 0.16 | 0.25 | 0.46 | 0.08 | 0.27 |
December 31, 2024 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($131,200K
+ $0K
+ $—K)
÷ $801,600K
= 0.16
The quick ratio, also known as the acid-test ratio, measures the ability of a company to meet its short-term obligations with its most liquid assets. nVent Electric PLC's quick ratio has shown significant fluctuations over the past five years.
As of December 31, 2020, the quick ratio was 0.27, which indicates that the company had $0.27 of liquid assets available to cover each dollar of its current liabilities. This suggests a relatively modest liquidity position.
By the end of December 31, 2021, the quick ratio had decreased further to 0.08, highlighting a sharp decline in the company's ability to meet its short-term obligations with its readily available assets. This may raise concerns about nVent Electric's liquidity management.
In contrast, as of December 31, 2022, the quick ratio improved to 0.46, indicating that nVent Electric had enhanced its liquidity position, with more liquid assets available to cover its short-term liabilities. This uptick suggests a positive development in the company's financial health.
However, by December 31, 2023, the quick ratio decreased again to 0.25, potentially signaling a reduction in the company's liquidity compared to the previous year. This may warrant further investigation into nVent Electric's short-term financial management practices.
As of December 31, 2024, the quick ratio stood at 0.16, showing a further decline in the company's ability to promptly meet its current obligations with its liquid assets. This downward trend over the years highlights the importance for nVent Electric to focus on effectively managing its short-term liquidity position to avoid potential financial constraints.
In conclusion, nVent Electric PLC's quick ratio has exhibited fluctuations over the past five years, showcasing varying levels of liquidity and the company's ability to meet its short-term obligations. It is essential for investors and stakeholders to closely monitor nVent Electric's liquidity position and assess the effectiveness of its financial management strategies to ensure sustainable operations in the future.
Peer comparison
Dec 31, 2024