Otis Worldwide Corp (OTIS)

Otis Worldwide Corp's current ratio has shown fluctuating trends over the years, indicating the company's ability to meet its short-term obligations. The ratio increased from 0.97 in 2020 to 1.32 in 2021, suggesting improved liquidity. However, it declined to 0.90 in 2022 before stabilizing around 0.99 in 2023 and 2024.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also varied for Otis Worldwide Corp. It remained relatively low between 0.69 and 0.80 from 2020 to 2023, indicating potential difficulty in meeting short-term obligations without relying on inventory. The ratio improved slightly to 0.77 in 2024.

Lastly, the cash ratio, which focuses solely on the most liquid assets (cash and cash equivalents) compared to current liabilities, fluctuated for Otis Worldwide Corp. It decreased from 0.27 in 2020 to 0.17 in 2022, reflecting a lower ability to cover short-term liabilities with cash. However, the ratio increased to 0.39 in 2023 before settling at 0.30 in 2024.

Overall, while the current ratio improved over the years, the quick ratio and cash ratio indicate some fluctuations and challenges for Otis Worldwide Corp in maintaining optimal liquidity levels to meet short-term obligations.

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Additional liquidity measure

The cash conversion cycle for Otis Worldwide Corp has been showing a decreasing trend over the past five years. As of December 31, 2020, the company had a negative cash conversion cycle of -33.37 days, indicating that the firm was able to convert its investments in inventory and accounts receivable back into cash in a relatively short period.

This trend continued in the subsequent years, with the cash conversion cycle further decreasing to -73.81 days as of December 31, 2021, -115.83 days as of December 31, 2022, -130.98 days as of December 31, 2023, and -148.80 days as of December 31, 2024. A negative cash conversion cycle implies that the company is able to generate cash quickly from its operational activities, which is generally a positive indicator as it signifies efficient management of working capital.

Overall, the consistent decrease in the cash conversion cycle for Otis Worldwide Corp over the years suggests that the company has been effectively managing its cash flow and working capital, potentially leading to improved liquidity and financial performance.