Xylem Inc (XYL)

Liquidity ratios

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 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Current ratio 1.76 1.72 1.64 2.01 1.89 1.65 1.63 1.62 2.27 2.33 1.85 1.84 1.80 2.59 2.40 1.55 1.63 1.55 1.47 1.44
Quick ratio 1.20 1.11 1.04 1.31 1.28 1.14 1.10 1.11 1.65 1.70 1.44 1.43 1.43 2.01 1.84 1.08 1.17 1.05 0.96 0.90
Cash ratio 0.46 0.33 0.31 0.56 0.59 0.61 0.57 0.58 0.97 0.96 0.94 0.92 0.96 1.25 1.15 0.47 0.48 0.31 0.25 0.19

The liquidity ratios of Xylem Inc over the past eight quarters demonstrate fluctuations in the company's ability to meet its short-term financial obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has generally been above 1, indicating that Xylem Inc has sufficient current assets to cover its current liabilities. The ratio has fluctuated between 1.62 and 2.01, with a peak in Q1 2023. This suggests varying levels of liquidity over the periods analyzed.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Xylem Inc's quick ratio has fluctuated between 1.14 and 1.44, indicating that the company may not be as well-positioned to cover its short-term liabilities without relying on inventory.

The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover its current liabilities with its cash and cash equivalents. Xylem Inc's cash ratio has ranged from 0.41 to 0.70, with a decrease noted in Q3 2023. This indicates that the company may have less liquid cash available to cover its immediate obligations during this period.

Overall, while Xylem Inc generally maintains a healthy current ratio above 1 and adequate quick ratios, the fluctuations in these ratios suggest some variability in the company's liquidity position over the past eight quarters. Investors and stakeholders should continue to monitor these liquidity ratios to assess Xylem Inc's ability to meet its short-term financial commitments effectively.

Additional liquidity measure

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 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Cash conversion cycle days 84.07 101.21 116.97 87.11 80.51 93.56 94.30 87.84 73.87 79.21 73.34 77.15 67.77 82.96 82.06 77.06 65.43 81.45 83.52 79.13

The cash conversion cycle of Xylem Inc has shown some fluctuations over the past eight quarters. In Q2 2023, the company experienced the longest cash conversion cycle at 116.97 days, indicating that it took longer to convert its investments in raw materials into cash from sales. This was followed by a slight improvement in Q3 2023 with a cycle of 101.21 days, which then increased again in Q4 2023 to 84.07 days.

Comparing these figures to the same quarters in the previous year, Q2 and Q3 of 2023 had higher cash conversion cycles than the corresponding quarters in 2022. Despite this, the Q4 2023 cycle was slightly better than Q4 2022. Overall, the company seems to have managed to optimize its cash conversion cycle in the last quarter of 2023 compared to the previous year.

These fluctuations in the cash conversion cycle can be influenced by various factors such as inventory management, accounts receivable collection, and accounts payable turnover. It is important for the company to monitor and manage these components effectively to ensure a more efficient conversion of investments into cash.