Terex Corporation (TEX)

Liquidity ratios

Dec 31, 2024 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
Current ratio 2.16 2.39 2.21 2.16 2.01 2.11 2.07 1.99 1.96 1.96 2.00 2.00 1.94 2.13 2.11 2.27 2.60 2.59 2.53 2.53
Quick ratio 0.96 1.03 0.95 0.95 0.82 0.94 0.91 0.84 0.85 0.80 0.84 0.81 0.85 1.13 1.15 1.27 1.45 1.34 1.15 1.18
Cash ratio 0.36 0.35 0.29 0.33 0.33 0.33 0.28 0.24 0.30 0.24 0.26 0.24 0.29 0.59 0.57 0.68 0.92 0.75 0.63 0.66

Terex Corporation's current ratio has shown fluctuations over the analyzed period, ranging from a high of 2.60 in December 2020 to a low of 1.94 in December 2021. The current ratio measures the company's ability to cover its short-term liabilities with its current assets. While the current ratio has generally remained above 1, indicating the company's short-term solvency, there was a slight decline in the most recent quarter from 2.39 in September 2024 to 2.16 in December 2024.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also displays variability. The ratio ranged from a low of 0.80 in September 2022 to a high of 1.45 in December 2020. The quick ratio deteriorated significantly in the latter part of the analysis period, dropping from 1.03 in September 2024 to 0.96 in December 2024. This trend suggests a potential decrease in the company's ability to meet its short-term obligations without relying on inventory liquidation.

Furthermore, the cash ratio, which indicates the proportion of current liabilities covered by cash and cash equivalents, exhibited a declining trend from a high of 0.92 in December 2020 to a low of 0.29 in December 2021. Although there was a slight recovery in the cash ratio in the latter quarters, reaching 0.36 in December 2024, it remains lower than the levels observed in earlier periods.

In conclusion, while Terex Corporation generally maintains a current ratio above 1, signaling short-term liquidity, the decreasing trend in the quick ratio and the cash ratio suggests a potential strain on the company's ability to meet immediate obligations without relying on inventory or non-cash assets. Monitoring these ratios is crucial to understanding the company's liquidity position and its capacity to weather any unforeseen financial challenges.

Additional liquidity measure

Dec 31, 2024 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
Cash conversion cycle days 96.75 105.62 98.82 95.16 83.18 86.72 90.54 88.70 82.68 88.54 89.69 86.86 79.85 75.51 79.34 84.04 79.83 87.89 82.79 77.40

The cash conversion cycle for Terex Corporation has shown some fluctuations over the periods analyzed. The cycle represents the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

From March 31, 2020, to December 31, 2024, the cash conversion cycle varied between a low of 75.51 days to a high of 105.62 days, indicating potential challenges in managing the company's working capital efficiently.

During certain periods, such as in June 30, 2024, and September 30, 2024, the cash conversion cycle exceeded 90 days, suggesting delayed conversion of investments into cash. This could indicate issues in inventory management, sales collection, or supplier payment processes that might impact the company's liquidity.

To optimize cash flow and operational efficiency, Terex Corporation may need to focus on improving inventory turnover, streamlining receivables collection, and managing payables effectively to reduce the cash conversion cycle and enhance overall financial performance.