Parker-Hannifin Corporation (PH)
Liquidity ratios
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Current ratio | 1.19 | 0.93 | 0.88 | 2.06 | 1.81 |
| Quick ratio | 0.63 | 0.35 | 0.47 | 0.59 | 1.06 |
| Cash ratio | 0.08 | -0.08 | 0.06 | 0.10 | 0.25 |
The liquidity ratios of Parker-Hannifin Corporation from June 30, 2021, to June 30, 2025, reveal notable trends and variations across the periods analyzed.
The current ratio experienced an initial increase from 1.81 in 2021 to a peak of 2.06 in 2022, indicative of improved short-term liquidity and a stronger ability to cover current liabilities with current assets. However, this ratio declined sharply in 2023 to 0.88, suggesting a deterioration in liquidity position where current assets became less than current liabilities. The ratio showed a modest recovery in subsequent periods, rising to 0.93 in 2024 and further to 1.19 in 2025, although it remained below the 2021 and 2022 peaks, indicating ongoing challenges in maintaining previous levels of liquidity.
The quick ratio followed a similar declining trend, decreasing from 1.06 in 2021 to 0.59 in 2022, then dropping further to 0.47 in 2023. This reduction indicates a decreasing capacity to meet short-term obligations using the most liquid assets, excluding inventories. The ratio continued to decline in 2024 to 0.35 and then increased modestly to 0.63 in 2025. Despite the recovery, the quick ratio remains below 1.0, highlighting a potential liquidity concern regarding the company's ability to promptly cover near-term liabilities with liquid assets.
The cash ratio, which measures the ability to meet short-term liabilities solely with cash and cash equivalents, declined from 0.25 in 2021 to 0.10 in 2022, and further to 0.06 in 2023. Notably, in 2024, it turned negative at -0.08, which is atypical and may reflect either a data anomaly or a situation where cash equivalents are insufficient to cover current liabilities and other short-term obligations are being financed through other means. In 2025, the ratio increased slightly to 0.08, suggesting a minor improvement but still well below the 2021 level.
Overall, the trend in Parker-Hannifin Corporation's liquidity ratios indicates a period of weakening liquidity starting from 2022 through 2024, with some signs of baseline improvement in 2025. The significant decline, especially in the current and quick ratios, may warrant further scrutiny into current asset management, short-term liabilities, and overall working capital strategies. The negative cash ratio in 2024 underscores potential liquidity stress or accounting nuances requiring additional investigation to fully understand the company's ability to meet immediate short-term obligations.
See also:
Additional liquidity measure
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 80.12 | 81.27 | 84.86 | 81.75 | 78.63 |
The cash conversion cycle (CCC) of Parker-Hannifin Corporation has exhibited variability over the period from June 30, 2021, to June 30, 2025. As of June 30, 2021, the CCC was approximately 78.63 days. This period increased slightly over the following year, reaching 81.75 days by June 30, 2022, indicative of a modest elongation in the time taken to convert investments in inventory and receivables into cash.
The upward trend continued into June 30, 2023, with the cycle extending to approximately 84.86 days, representing the longest duration within this timeframe. This suggests that during this period, the company experienced either longer inventory holding periods, extended collection periods on receivables, or both, resulting in a longer operational cycle before cash inflows were realized.
Subsequent data shows a contraction in the cash conversion cycle to 81.27 days as of June 30, 2024, and further shortening to 80.12 days by June 30, 2025. These reductions imply an improvement in the efficiency of working capital management, with faster inventory turnover, quicker receivables collection, or both, ultimately leading to a more efficient conversion of investments into cash.
Overall, the trend indicates a period of elongation followed by a gradual improvement in the cash conversion cycle, moving towards a shorter cycle in the most recent period. This pattern reflects efforts or changes within the company's operations or credit policies aimed at optimizing cash flow and reducing the time between outlay and inflow of cash.