Rockwell Automation Inc (ROK)
Liquidity ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.46 | 1.01 | 1.02 | 1.48 | 1.54 |
| Quick ratio | 0.96 | 0.63 | 0.70 | 1.08 | 1.15 |
| Cash ratio | 0.32 | 0.14 | 0.22 | 0.39 | 0.55 |
The liquidity ratios of Rockwell Automation Inc indicate the company's ability to meet short-term obligations and manage its current liabilities using its current assets. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, improved significantly from 2022 to 2023. However, it is lower than in 2019 and 2020, indicating that the company may have a lower ability to meet its short-term obligations with its current assets in the recent period.
The quick ratio, which provides a more stringent measure by excluding inventory from current assets, also showed improvement in 2023 compared to 2022. However, it is lower than in 2019 and 2020, indicating that Rockwell Automation Inc may have a reduced ability to cover short-term obligations using its most liquid assets in 2023.
The cash ratio, which provides the most conservative measure by considering only cash and cash equivalents, also improved in 2023 compared to 2022. However, similar to the quick ratio, it is lower than in 2019 and 2020, suggesting that the company's ability to cover short-term obligations with its cash and cash equivalents has declined.
In summary, while Rockwell Automation Inc has shown improvement in its liquidity ratios in 2023 compared to 2022, these ratios remain lower than in 2019 and 2020, indicating potential challenges in meeting short-term obligations with its current assets, especially with its most liquid assets.
Additional liquidity measure
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 98.11 | 85.98 | 69.30 | 66.14 | 56.79 |
The cash conversion cycle of Rockwell Automation Inc has exhibited an increasing trend over the past five years. As of September 30, 2023, the cash conversion cycle stands at 104.74 days, compared to 83.74 days in 2022, 66.14 days in 2021, 61.88 days in 2020, and 52.83 days in 2019. This indicates a lengthening of the time it takes to convert the company's investments in inventory and accounts receivable into cash.
The rising cash conversion cycle may be attributed to factors such as extended payment terms to suppliers, inventory management inefficiencies, or a slowdown in the collection of receivables. It is essential for the company to closely monitor and address the components of the cash conversion cycle to enhance working capital efficiency and optimize cash flow management.