Parker-Hannifin Corporation (PH)

The liquidity ratios of Parker-Hannifin Corporation have shown fluctuations over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has been decreasing from 1.60 in 2020 to 0.93 in 2024. This decreasing trend indicates that the company may be facing challenges in maintaining sufficient short-term assets to meet its current obligations.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, has also been on a declining trend, going from 0.28 in 2020 to 0.09 in 2024. This suggests that the company may have limited ability to meet its immediate liabilities without relying on selling inventory.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents in relation to current liabilities, has followed a similar decreasing trend, dropping from 0.24 in 2020 to 0.06 in 2024. This indicates that the company's ability to cover its short-term obligations solely with available cash has been weakening over the years.

Overall, the declining trend in all three liquidity ratios suggests a potential liquidity strain for Parker-Hannifin Corporation, as it may be struggling to maintain sufficient liquid assets to meet its short-term financial obligations. Investors and stakeholders should closely monitor the company's liquidity position to ensure its financial health and stability.

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See also:

Parker-Hannifin Corporation Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Parker-Hannifin Corporation has shown some variation over the past five years. In the most recent fiscal year ending June 30, 2024, the company's cash conversion cycle decreased to 21.35 days from 22.36 days in the previous year. This indicates that the company was able to convert its resources into cash more efficiently in 2024 compared to 2023.

Looking further back, there was a significant improvement in the cash conversion cycle from 2020 to 2021, where it decreased from 28.91 days to 16.78 days. This indicates a notable enhancement in the company's ability to manage its cash flow and operating cycle efficiently.

However, there was a slight increase in the cash conversion cycle in 2022 compared to 2021, which reversed the trend of improvement seen in the previous year. Nonetheless, the cycle remained relatively low at 17.38 days.

Overall, the trend in Parker-Hannifin Corporation's cash conversion cycle demonstrates a general ability to efficiently manage its working capital and convert its resources into cash. It is important for the company to continue monitoring and optimizing its cash conversion cycle to ensure healthy liquidity and operational efficiency in the future.