Transdigm Group Incorporated (TDG)
Liquidity ratios
| Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.58 | 3.81 | 3.71 | 4.07 | 4.27 | 4.08 | 2.96 | 4.21 | 3.96 | 4.69 | 5.05 | 5.06 | 4.23 | 4.11 | 4.02 | 4.53 | 4.31 | 4.10 | 3.14 | 1.99 |
| Quick ratio | 1.21 | 2.55 | 2.49 | 2.95 | 3.04 | 2.83 | 1.39 | 3.01 | 2.84 | 2.84 | 3.24 | 3.49 | 3.36 | 2.77 | 2.58 | 3.14 | 2.92 | 2.76 | 1.61 | 1.25 |
| Cash ratio | 0.99 | 1.85 | 1.95 | 2.32 | 2.26 | 2.08 | 1.39 | 2.40 | 2.16 | 2.84 | 3.24 | 3.49 | 2.88 | 2.77 | 2.58 | 3.14 | 2.92 | 2.76 | 1.61 | 1.25 |
Transdigm Group Incorporated's liquidity ratios, namely the current ratio, quick ratio, and cash ratio, have shown fluctuating trends over the past few quarters.
The current ratio, which measures the ability of the company to cover its short-term obligations with its current assets, has shown a declining trend, reaching a value of 1.58 as of September 30, 2024. This indicates that the company may have fewer current assets relative to its current liabilities compared to previous quarters.
In contrast, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also exhibited a decreasing trend, falling to 1.21 on September 30, 2024. This decline suggests that the company may have a lower capability to meet its immediate liabilities without relying on inventory compared to previous periods.
The cash ratio, which provides the most conservative estimate of liquidity by considering only cash and cash equivalents, has also shown a downward trajectory, standing at 0.99 as of September 30, 2024. This indicates a potential decrease in the company's ability to pay off its current liabilities using only cash and equivalents.
Overall, Transdigm Group Incorporated's liquidity ratios have fluctuated, signaling potential shifts in the company's ability to meet its short-term obligations. It would be prudent for stakeholders to closely monitor these ratios to assess the company's liquidity position effectively.
Additional liquidity measure
| Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 236.99 | 245.83 | 237.21 | 239.55 | 242.69 | 251.38 | 182.57 | 233.29 | 229.97 | 173.13 | 163.53 | 162.56 | 213.12 | 157.00 | 160.24 | 168.12 | 158.21 | 163.87 | 138.66 | 141.78 |
The cash conversion cycle for Transdigm Group Incorporated has varied over the past several quarters, ranging from 138.66 days to 251.38 days.
The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cycle indicates that the company is able to efficiently manage its working capital and turn its assets into cash quickly, while a longer cycle may suggest inefficiencies in the company's operations or potential liquidity constraints.
Analyzing the trend of the cash conversion cycle for Transdigm Group Incorporated, we observe fluctuations in the duration of the cycle. In the most recent quarter, the cycle decreased to 236.99 days compared to the previous quarter's 245.83 days, indicating a slight improvement in the company's efficiency in managing its working capital.
It is essential for the company to closely monitor and manage its cash conversion cycle to optimize its working capital efficiency, maintain liquidity, and improve overall financial performance. Efforts to streamline inventory management, enhance collection processes, and optimize payment terms with suppliers could potentially help in reducing the cash conversion cycle and improve the company's financial health.