Otis Worldwide Corp (OTIS)

Liquidity ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020
Current ratio 0.99 0.80 0.79 0.97 0.99 1.00 0.90 0.90 0.90 0.97 0.97 1.18 1.32 1.00 0.99 0.99 0.97
Quick ratio 0.77 0.58 0.61 0.76 0.78 0.79 0.69 0.69 0.69 0.72 0.73 0.71 0.80 0.80 0.81 0.81 0.79
Cash ratio 0.30 0.10 0.12 0.14 0.20 0.24 0.17 0.16 0.17 0.17 0.19 0.19 0.25 0.24 0.29 0.27 0.27

Based on the liquidity ratios of Otis Worldwide Corp, we can observe the following trends:

1. Current Ratio:
- The current ratio fluctuated over the years, ranging from 0.79 to 1.32.
- The ratio improved significantly from 2021 to 2023, indicating better short-term liquidity.
- However, it decreased notably to 0.79 by June 30, 2024, which may raise concerns about the company's ability to meet its short-term obligations.

2. Quick Ratio:
- The quick ratio followed a similar pattern to the current ratio, fluctuating between 0.58 and 0.81.
- The ratio showed improvement from 2021 to 2023 before declining to 0.61 by June 30, 2024.
- The decreasing trend suggests a potential strain on the company's ability to cover immediate liabilities with its most liquid assets.

3. Cash Ratio:
- The cash ratio ranged from 0.10 to 0.30, indicating the company had varying levels of cash reserves to cover its current liabilities.
- The ratio showed a decreasing trend from 2021 to 2024, hitting its lowest point of 0.10 by September 30, 2024, which may pose a liquidity risk in terms of cash availability for immediate payments.

In summary, while the current, quick, and cash ratios of Otis Worldwide Corp have fluctuated over the years, there seems to be a recent decline in liquidity levels as of June and September 2024. This may suggest a potential liquidity challenge that requires attention to ensure the company can meet its short-term financial obligations effectively.

Additional liquidity measure

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020
Cash conversion cycle days -148.64 -111.06 -101.75 -86.25 -130.98 -95.79 -112.33 -72.05 -115.83 -82.31 -93.85 -65.51 -73.81 -82.77 -56.46 -34.86 21.44

The cash conversion cycle of Otis Worldwide Corp has shown a consistent trend of improvement over the analyzed period, as indicated by the decreasing number of days. The cash conversion cycle represents the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

Starting at 21.44 days as of December 31, 2020, the company's cash conversion cycle turned negative in the subsequent quarters, indicating that Otis was able to collect cash from its operating cycle faster than it paid suppliers. This trend continued through the years, with the cash conversion cycle hitting its lowest point of -148.64 days as of December 31, 2024.

A negative cash conversion cycle implies that Otis efficiently manages its working capital components, particularly its accounts payable, accounts receivable, and inventory turnover. It indicates that the company is able to collect cash from customers before needing to pay suppliers, resulting in a potentially advantageous position for cash flow management and liquidity.

Overall, a consistently decreasing and negative cash conversion cycle for Otis Worldwide Corp reflects strong working capital management, efficient operations, and a potentially healthy financial position. Investors and analysts may view this trend positively as it suggests effective utilization of resources and improved cash flow generation.