Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
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- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
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- Analysis of Revenues
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Liquidity Ratios (Summary)
Ecolab Inc., liquidity ratios (quarterly data)
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
- Current Ratio Trends
- The current ratio exhibited overall growth from the first quarter of 2018 through the end of 2020, rising from 1.15 to a peak of 1.75 by December 2020. This indicates an improvement in the company's short-term liquidity positioning during this period. The upward trend continued into the early quarters of 2021, reaching 1.91 in June before decreasing notably to 1.32 by December 2021. The decline in the final quarter suggests a reduction in working capital relative to current liabilities.
- Quick Ratio Trends
- The quick ratio followed a pattern broadly consistent with the current ratio, beginning at 0.69 in March 2018 and increasing steadily with some fluctuations up to a peak of 1.30 in June 2021. This progression signals enhanced liquidity excluding inventories. However, the sharp decline to 0.80 in the last reported quarter aligns with the observed drop in the current ratio, indicating a less robust liquid asset base at year-end 2021.
- Cash Ratio Trends
- The cash ratio showed significant volatility relative to the other liquidity measures. It remained very low, around 0.01 to 0.06, through 2018 and most of 2019, indicating minimal cash and cash equivalents relative to current liabilities. Starting in March 2020, there was a notable surge to 0.39, peaking at 0.49 in June 2021, which reflects a substantial buildup of cash assets. However, similar to the other ratios, the cash ratio dropped sharply to 0.10 by December 2021, suggesting a considerable drawdown of cash reserves towards the end of the report period.
- Overall Liquidity Insights
- The company's liquidity improved significantly from 2018 to mid-2021, as evidenced by increasing current, quick, and cash ratios. This improvement could be attributed to stronger asset management, increased cash holdings, or reduced short-term liabilities. The uniform pattern of decline in all three ratios in the last quarter of 2021 indicates a sudden change in liquidity status, potentially signaling increased short-term obligations or decreased liquid assets. The substantial cash ratio increase in 2020 and 2021 may be reflective of precautionary cash accumulation during uncertain periods, with the subsequent decrease possibly relating to strategic cash deployment or seasonal factors.
Current Ratio
Ecolab Inc., current ratio calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||
| Current assets | |||||||||||||||||||||
| Current liabilities | |||||||||||||||||||||
| Liquidity Ratio | |||||||||||||||||||||
| Current ratio1 | |||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||
| Current Ratio, Competitors2 | |||||||||||||||||||||
| Linde plc | |||||||||||||||||||||
| Sherwin-Williams Co. | |||||||||||||||||||||
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q4 2021 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- The current assets exhibited relatively stable levels throughout 2018 and 2019, generally fluctuating around the 4.6 to 4.9 billion USD range. A notable increase occurred at the start of 2020, with a peak of approximately 6.44 billion USD in March 2020. This was followed by a decline throughout the remainder of 2020 and into 2021, with values decreasing to around 4.69 billion USD by December 2021. The initial surge in early 2020 may indicate an accumulation of short-term resources, possibly in response to external economic conditions or strategic decisions.
- Current Liabilities
- Current liabilities showed a gradual decline from 2018 through 2019, decreasing from roughly 3.98 billion USD to approximately 3.63 billion USD by the end of 2019. A significant increase occurred in the first quarter of 2020, reaching approximately 4.26 billion USD, followed by a sharp decrease over the next three quarters, dropping to around 2.93 billion USD by December 2020. During 2021, current liabilities remained relatively stable in the range of 2.85 to 2.89 billion USD for the first three quarters but rose notably to 3.55 billion USD in the final quarter. These fluctuations suggest changes in short-term obligations, possibly linked to operational adjustments or refinancing activities.
- Current Ratio
- The current ratio remained above 1.0 throughout the observed periods, indicating that current assets consistently exceeded current liabilities. In 2018 and 2019, the ratio fluctuated between 1.14 and 1.34, showing moderate liquidity. Beginning in early 2020, a marked upward trend was apparent, with the ratio increasing to as high as 1.75 by the end of 2020 and peaking at 1.91 in mid-2021. This rise reflects improvement in short-term financial strength, likely driven by higher current assets and reduced current liabilities during this period. However, in the last quarter of 2021, the ratio declined to 1.32, suggesting a relative tightening of liquidity compared to earlier quarters.
Quick Ratio
Ecolab Inc., quick ratio calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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. | |||||||||||||||||||||
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q4 2021 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Analysis of Total Quick Assets
- Total quick assets showed moderate fluctuations from March 2018 through December 2019, generally remaining in the range of approximately 2.7 to 3.0 billion US dollars. A significant increase occurred in the first quarter of 2020, with quick assets rising sharply to around 4.5 billion. This peak was followed by a gradual decline over the subsequent quarters, declining to approximately 2.8 billion by the fourth quarter of 2021.
- Analysis of Current Liabilities
- Current liabilities exhibited a more variable pattern over the period analyzed. Starting near 3.6 to 4.0 billion US dollars between early 2018 and early 2020, liabilities peaked above 4.2 billion in March 2020. Subsequently, liabilities decreased markedly through the end of 2020 and early 2021, reaching a low near 2.85 billion. However, there was a notable increase again toward the last quarter of 2021, with current liabilities rising back above 3.5 billion.
- Analysis of Quick Ratio
- The quick ratio, reflecting liquidity position, generally improved over the span of the data. It started below 1, ranged between 0.67 and 0.82 prior to 2020, indicating a less than ideal quick asset coverage of current liabilities. A sharp improvement began in the first quarter of 2020, exceeding 1.0 and reaching a high of 1.3 by mid-2021, suggesting stronger short-term liquidity. Toward the end of 2021, the quick ratio declined to 0.8, indicating a reduction in liquidity strength.
- Overall Insights
- The period saw a significant liquidity improvement around early 2020, coinciding with a dramatic increase in quick assets and a decrease in current liabilities, resulting in improved quick ratios above 1. This improved liquidity position could suggest a strategic buffer or response to external factors during that time. However, by the end of 2021, a reversal occurred, with quick assets decreasing, liabilities increasing, and the quick ratio dropping below the optimal threshold, possibly indicating emerging liquidity pressures or changes in operational capital management.
Cash Ratio
Ecolab Inc., cash ratio calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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. | |||||||||||||||||||||
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q4 2021 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets exhibit significant volatility over the analyzed period. Initial values start moderately around 175,500 thousand USD and then fluctuate notably, with a pronounced peak observed in the first quarter of 2020, reaching approximately 1,661,900 thousand USD. Following this peak, a decline occurs, with another increase in mid-2021, but the trend towards the end of 2021 shows a downward move, falling to 359,900 thousand USD by the fourth quarter of 2021. This pattern indicates periods of strategic cash accumulation followed by substantial reductions.
- Current Liabilities
- Current liabilities demonstrate a general pattern of variation without a clear upward or downward long-term trend. Starting at approximately 3,982,800 thousand USD in the first quarter of 2018, liabilities show both increases and decreases across quarters. A notable rise is seen in early 2020, peaking around 4,257,400 thousand USD in March 2020. Subsequently, liabilities decrease steadily until the last quarter of 2020 before experiencing minor fluctuations in 2021. By the end of the period, liabilities increase again to 3,553,200 thousand USD.
- Cash Ratio
- The cash ratio remains relatively low and stable from 2018 through 2019, fluctuating between 0.01 and 0.06, indicating limited cash coverage of current liabilities during these periods. A considerable increase takes place starting in the first quarter of 2020, where the ratio jumps sharply to 0.39, and maintains elevated levels above 0.3 throughout 2020 and into 2021. The cash ratio peaks near 0.49 in mid-2021, suggesting a significantly improved liquidity position. However, the ratio declines notably in the last quarter of 2021, ending at approximately 0.10, implying a reduced ability to cover short-term liabilities with available cash.
- Overall Insights
- The data reveals a period of enhanced liquidity in 2020, characterized by a substantial increase in cash assets and an improved cash ratio, despite current liabilities peaking at the onset of 2020. This suggests a strategic accumulation of cash resources, possibly as a buffer against uncertainties or to capitalize on investment opportunities. The decline in cash assets and cash ratio in late 2021, combined with rising current liabilities, could indicate increased operational expenditure, investment, or debt management activities reducing liquid resources. The volatility in cash assets and fluctuations in the cash ratio highlight shifting liquidity management strategies in response to changing business conditions.