Pentair PLC (PNR)

Pentair PLC's liquidity ratios show a pattern of fluctuation over the years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, increased from 1.26 in 2020 to 1.60 in 2024. This indicates that Pentair has improved its short-term liquidity position over the years.

In contrast, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, experienced some volatility during the period. It decreased from 0.10 in 2020 to 0.08 in 2021, then showed some improvement to 0.12 in 2024. The quick ratio values suggest that Pentair may have faced challenges in meeting its short-term obligations without relying on inventory in 2021.

Lastly, Pentair's cash ratio, which focuses solely on the most liquid assets like cash and equivalents, exhibited an increasing trend from 0.11 in 2020 to 0.13 in 2024. This indicates that the company's ability to cover its current liabilities with its most liquid assets improved over the years.

Overall, Pentair PLC's liquidity ratios show a mixed performance, with improvements in current and cash ratios, while the quick ratio faced some challenges in 2021 but recovered in the subsequent years. Investors should continue to monitor these ratios to assess Pentair's ability to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle of Pentair PLC has shown fluctuations over the past five years.

As of December 31, 2020, the company's cash conversion cycle was 25.59 days, which indicates that Pentair had a relatively efficient conversion of its invested resources into cash during that period.

By the end of December 31, 2021, the cash conversion cycle improved to 21.21 days, reflecting a more efficient management of the company's working capital and better control over its cash flows.

However, there was a significant increase in the cash conversion cycle by the end of December 31, 2022, where it reached 44.49 days. This suggests that Pentair may have experienced challenges in converting its investments in inventory and accounts receivable into cash during that year.

The trend continued in December 31, 2023, with a cash conversion cycle of 43.65 days, indicating that the company's liquidity and working capital management might have faced ongoing difficulties.

By the end of December 31, 2024, there was a slight improvement in the cash conversion cycle to 37.39 days, although it remained higher than the levels seen in the earlier years, showing that Pentair had not fully recovered to its previous efficiency levels.

Overall, the fluctuation in Pentair's cash conversion cycle over the five-year period suggests varying degrees of effectiveness in managing working capital and converting operational activities into cash.