Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
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- Analysis of Short-term (Operating) Activity Ratios
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- Analysis of Reportable Segments
- Analysis of Geographic Areas
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Liquidity Ratios (Summary)
Ecolab Inc., liquidity ratios
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Current ratio | ||||||
| Quick ratio | ||||||
| Cash ratio |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Current Ratio
- The current ratio exhibited moderate fluctuations over the reported periods. It began at 1.34 in 2017, slightly declined to 1.27 in 2018, and then increased marginally to 1.33 in 2019. A noticeable peak occurred in 2020, reaching 1.75, followed by a decrease to 1.32 in 2021. Overall, the current ratio maintained values above 1, signifying that the company consistently held more current assets than current liabilities, with a significant liquidity improvement seen in 2020.
- Quick Ratio
- The quick ratio followed a pattern similar to the current ratio but displayed more pronounced changes in the later years. The ratio started at 0.81 in 2017 and decreased to 0.75 in 2018, then recovered slightly to 0.82 in 2019. A substantial increase was observed in 2020, rising to 1.21, suggesting improved liquidity excluding inventory. However, this improvement was not sustained, as the ratio declined to 0.8 in 2021. This indicates that liquid assets relative to current liabilities were strongest in 2020 but generally below 1 in other years, reflecting a conservative liquidity position.
- Cash Ratio
- The cash ratio displayed significant variability across the periods. It remained very low in the initial three years, with values of 0.06 in 2017, 0.03 in 2018, and 0.05 in 2019, indicating minimal cash or cash equivalents relative to current liabilities. In 2020, there was a sharp increase to 0.43, aligning with the surge in current and quick ratios during the same year, suggesting a strategic buildup of immediate liquidity. However, this increase partially reversed in 2021, with the ratio declining to 0.10, though it remained above the levels observed prior to 2020.
Current Ratio
Ecolab Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Current ratio1 | ||||||
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
| Current Ratio, Sector | ||||||
| Chemicals | ||||||
| Current Ratio, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- Current assets exhibited a general upward trend from 2017 through 2020, rising from approximately 4,596,400 thousand USD in 2017 to a peak of about 5,117,400 thousand USD in 2020. However, in 2021 there was a noticeable decline to 4,687,100 thousand USD, indicating a reduction in the liquidity position compared to the previous year.
- Current Liabilities
- Current liabilities showed some fluctuations over the period. Beginning at 3,431,800 thousand USD in 2017, they increased through 2018 to 3,685,600 thousand USD, then slightly decreased in 2019 to 3,630,600 thousand USD. In 2020, there was a significant drop to 2,932,200 thousand USD, followed by a rise again in 2021 to 3,553,200 thousand USD. This volatility suggests changes in short-term obligations that may relate to operational or financing decisions.
- Current Ratio
- The current ratio, reflecting liquidity and ability to meet short-term liabilities, followed a variable pattern. It started at 1.34 in 2017, slightly decreased to 1.27 in 2018, then recovered to 1.33 in 2019. A substantial increase to 1.75 occurred in 2020, indicating stronger liquidity, likely supported by the decreased current liabilities and increased current assets. In 2021, the ratio declined to 1.32, suggesting a normalization toward previous levels, aligning with the reduction in current assets and increase in current liabilities observed that year.
Quick Ratio
Ecolab Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | ||||||
| Accounts receivable, net | ||||||
| Total quick assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Quick ratio1 | ||||||
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
| Quick Ratio, Sector | ||||||
| Chemicals | ||||||
| Quick Ratio, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets exhibited a general upward trend from 2017 through 2020, rising from approximately 2,785,500 thousand USD in 2017 to a peak of 3,534,000 thousand USD in 2020. However, in 2021, there was a noticeable decline to 2,838,300 thousand USD, indicating a reduction in liquid assets available immediately to meet short-term obligations compared to the previous year.
- Current liabilities
- Current liabilities showed variability over the observed period. They increased from 3,431,800 thousand USD in 2017 to 3,685,600 thousand USD in 2018, followed by a slight decrease in 2019 to 3,630,600 thousand USD. A significant reduction occurred in 2020, dropping to 2,932,200 thousand USD, before rising again in 2021 to 3,553,200 thousand USD. This fluctuation points to varying short-term obligations that the company faced, with the lowest liability level recorded in 2020.
- Quick ratio
- The quick ratio, which measures the ability to cover current liabilities with quick assets, mirrored the patterns observed in assets and liabilities. It decreased from 0.81 in 2017 to a low of 0.75 in 2018, then improved modestly to 0.82 in 2019. A substantial increase to 1.21 in 2020 suggests that quick assets significantly exceeded current liabilities at that time, indicating strong liquidity. However, this ratio declined sharply to 0.80 in 2021, reflecting a reduction in immediate liquidity relative to short-term obligations.
- Summary
- Overall, the data reveals that liquidity, as expressed by the quick ratio, remained below 1 for most years except 2020, when the company experienced optimal liquidity conditions. The rise in quick assets and the concurrent decline in current liabilities in 2020 contributed to this peak. The subsequent decline in quick assets and rise in current liabilities in 2021 decreased liquidity, signaling tighter short-term financial flexibility. These trends suggest a fluctuating liquidity position over the five-year period, with 2020 representing a notably strong year in terms of liquid asset coverage of liabilities.
Cash Ratio
Ecolab Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | ||||||
| Total cash assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Cash ratio1 | ||||||
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
| Cash Ratio, Sector | ||||||
| Chemicals | ||||||
| Cash Ratio, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the analyzed five-year period.
- Total cash assets
- The total cash assets showed significant variability. Starting at 211,400 thousand USD in 2017, there was a decline to 114,700 thousand USD in 2018, followed by a recovery to 186,400 thousand USD in 2019. A sharp increase occurred in 2020, reaching 1,260,200 thousand USD, before dropping to 359,900 thousand USD in 2021. This pattern indicates a substantial cash inflow or liquidity event in 2020, which was partially reversed the following year, though cash levels remained higher than in the initial years.
- Current liabilities
- Current liabilities exhibited moderate fluctuations during the period. The liabilities increased from 3,431,800 thousand USD in 2017 to 3,685,600 thousand USD in 2018, then slightly decreased to 3,630,600 thousand USD in 2019. A notable reduction to 2,932,200 thousand USD occurred in 2020, followed by a rise to 3,553,200 thousand USD in 2021. This suggests some debt or short-term obligation reduction in 2020, with liabilities rebounding in the subsequent year but still under the 2018 peak.
- Cash ratio
- The cash ratio, representing liquidity relative to current liabilities, remained low throughout the period but showed pronounced changes. The ratio started at 0.06 in 2017, decreased to a minimum of 0.03 in 2018, and then increased to 0.05 in 2019. A marked improvement to 0.43 occurred in 2020, coinciding with the spike in cash assets and drop in liabilities, indicating much stronger liquidity that year. However, it declined to 0.1 in 2021, reflecting the decrease in cash and increase in liabilities, although liquidity remained higher than in the years before 2020.
Overall, the year 2020 stands out due to a significant enhancement in liquidity, characterized by elevated cash levels and reduced current liabilities, resulting in a substantially improved cash ratio. The other years show more stable or modest variations, with lower liquidity and higher liabilities relative to cash. The data suggests a temporary but impactful change in financial position during 2020, followed by a partial reversion in 2021.