Pentair PLC (PNR)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.65 | 1.47 | 1.24 | 1.26 | 1.42 |
| Quick ratio | 0.17 | 0.09 | 0.08 | 0.10 | 0.10 |
| Cash ratio | 0.18 | 0.10 | 0.09 | 0.11 | 0.11 |
Pentair plc's liquidity ratios indicate the company's ability to meet its short-term obligations and manage its current liabilities efficiently.
The current ratio has shown an improving trend over the past five years, standing at 1.65 in 2023 compared to 1.47 in 2022. This suggests that Pentair has a healthy level of current assets to cover its current liabilities and indicates better liquidity position in the most recent year.
The quick ratio, which excludes inventory from current assets, also demonstrates an increasing trend, improving from 0.72 in 2022 to 0.94 in 2023. This indicates that the company has a sufficient level of highly liquid assets to cover its short-term liabilities without relying on selling inventory.
The cash ratio has shown fluctuations over the years but has generally improved in 2023, with a ratio of 0.27. This indicates that Pentair has a higher proportion of cash to cover its current liabilities, which is a positive indicator of liquidity and ability to meet short-term obligations without relying on other current assets.
Overall, Pentair plc's liquidity ratios have shown improvement in 2023, reflecting a stronger ability to meet short-term obligations and manage its current liabilities efficiently compared to previous years.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 43.65 | 44.49 | 21.21 | 25.59 | 10.02 |
The cash conversion cycle of Pentair plc has shown a fluctuating trend over the past five years. In 2023, the cash conversion cycle increased to 112.55 days from 108.94 days in 2022. This implies that Pentair is taking longer to convert its investments in raw materials and production into cash.
Comparing to past years, the cash conversion cycle was higher in 2021 at 82.98 days, compared to 83.08 days in 2020 and 77.15 days in 2019. This indicates that Pentair was more efficient in managing its working capital in 2019 and 2020 than in the following years, where the cycle increased.
The increasing trend in the cash conversion cycle suggests that Pentair may be facing challenges in managing its inventories, collecting receivables, and paying off its obligations efficiently. It is essential for the company to closely monitor and improve its working capital management to optimize its cash flow and overall financial performance.