TE Connectivity Ltd (TEL)

Liquidity ratios

Sep 30, 2024 Sep 30, 2023 Sep 30, 2022 Sep 30, 2021 Sep 30, 2020
Current ratio 1.61 1.77 1.57 1.56 1.57
Quick ratio 0.92 1.04 0.85 0.89 0.90
Cash ratio 0.28 0.37 0.23 0.26 0.26

TE Connectivity Ltd's liquidity ratios have shown some fluctuations over the past five years.

The current ratio, which measures the company's ability to meet short-term obligations with its current assets, decreased slightly from 1.77 in 2023 to 1.61 in 2024. This indicates that TE Connectivity's current assets may have decreased relative to its current liabilities, but the company still has a comfortable buffer to cover its short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. TE Connectivity's quick ratio decreased from 1.04 in 2023 to 0.92 in 2024, suggesting a potential decrease in the company's ability to cover its short-term liabilities without relying on selling inventory. However, the ratio is still above 1, indicating the company's ability to cover its immediate liabilities with its most liquid assets.

The cash ratio, which is the most stringent measure of liquidity, declined from 0.37 in 2023 to 0.28 in 2024. This indicates that TE Connectivity has a lower proportion of cash and cash equivalents to cover its current liabilities, which may pose a liquidity risk if the company faces unexpected cash needs.

Overall, while TE Connectivity's liquidity ratios have exhibited some fluctuations, the company generally maintains a solid liquidity position, with current and quick ratios above 1, indicating a strong ability to meet its short-term obligations. However, the declining trend in the cash ratio warrants attention to ensure the company has sufficient liquidity to weather any unforeseen financial challenges.


Additional liquidity measure

Sep 30, 2024 Sep 30, 2023 Sep 30, 2022 Sep 30, 2021 Sep 30, 2020
Cash conversion cycle days 93.54 95.44 95.02 90.21 93.59

TE Connectivity Ltd's cash conversion cycle has shown fluctuations over the past five years. In 2024, the company's cash conversion cycle decreased to 93.54 days from 95.44 days in 2023. This indicates that the company took slightly less time to convert its investments in inventory and other resources into cash during the year. However, when compared to 2022 and 2021, the cash conversion cycle was relatively higher in 2024 and 2023.

In 2020, the cash conversion cycle was 93.59 days, showing a similar level of efficiency in managing cash conversion as in 2024. Overall, TE Connectivity Ltd's cash conversion cycle has been relatively stable around the 90-95 days range in the past five years, suggesting that the company has been managing its working capital and operations effectively.