Textron Inc (TXT)

Textron Inc's liquidity ratios demonstrate fluctuating levels of liquidity over the past five years. The current ratio, which measures the company's ability to cover short-term obligations with current assets, has shown a downward trend from 2019 to 2023, reaching a low of 0.91 in 2023. This indicates that Textron Inc may have had difficulty meeting its short-term obligations in 2023 compared to the previous years.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, reflects a decline in liquidity over the same period, with a notable drop to 0.01 in 2023. This signifies a significant decrease in Textron Inc's ability to meet immediate obligations with its most liquid assets.

The cash ratio, which is the most conservative measure of liquidity, also shows a concerning decline over the years, falling to 0.01 in 2023. This suggests that Textron Inc had minimal cash available relative to its current liabilities in 2023, potentially indicating liquidity pressure.

Overall, Textron Inc's liquidity ratios paint a picture of weakening liquidity position over the past five years, raising concerns about the company's ability to meet its short-term financial obligations. Further analysis of the company's cash management practices and working capital management may be necessary to address these liquidity challenges.

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Additional liquidity measure

The cash conversion cycle of Textron Inc has shown a fluctuating trend over the past five years. In 2023, the cash conversion cycle was 1,237.96 days, indicating that on average, it takes the company approximately 1,237.96 days to convert its investments in inventory and accounts receivable into cash from sales. This represents an improvement compared to the previous year's cycle of 1,298.35 days.

In 2021, the cash conversion cycle was 1,137.30 days, reflecting a shorter time period compared to 2022. However, the cycle increased in 2020 to 1,215.40 days, suggesting a longer cash conversion cycle that year. The most significant improvement in the cash conversion cycle was observed in 2019, with only 118.73 days needed to convert investments into cash, indicating a highly efficient performance in managing inventory, accounts receivable, and accounts payable during that year.

Overall, Textron Inc has experienced fluctuations in its cash conversion cycle over the years, with some periods showing more efficient management of working capital than others. It is essential for the company to conduct further analysis to identify the factors driving these fluctuations and implement strategies to optimize its cash conversion cycle for improved financial performance.