Liquidity ratios measure the company ability to meet its short-term obligations.
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- Income Statement
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Liquidity Ratios (Summary)
Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | ||
---|---|---|---|---|---|---|---|
Current ratio | |||||||
Quick ratio | |||||||
Cash ratio |
Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).
- Current ratio trends
- The current ratio remained relatively stable at around 1.29 in 2014 and 2015, then experienced a decline to 1.24 in 2016. A notable increase occurred in 2017, reaching 1.64, followed by a sharp decline to 1.07 in 2018. In 2019, the ratio slightly recovered to 1.19. This indicates some fluctuation in the company's short-term liquidity position over the period, with a peak in 2017 suggesting improved current asset coverage of current liabilities during that year.
- Quick ratio trends
- The quick ratio followed a generally declining trend from 0.97 in 2014 to 0.73 in 2016, indicating a decrease in the company's ability to cover current liabilities with its most liquid assets. It spiked in 2017 to 1.22, pointing to a temporary improvement in liquidity excluding inventory. However, this was followed by declines in 2018 and 2019 to 0.72 and 0.83 respectively, suggesting a weakening quick liquidity position after 2017.
- Cash ratio trends
- The cash ratio showed a modest increase from 0.37 in 2014 to 0.61 in 2017, indicating a general improvement in the company's capacity to meet current liabilities with cash and cash equivalents. However, this was followed by a sharp decrease to 0.18 in 2018, suggesting a significant reduction in cash reserves relative to current liabilities. A partial recovery to 0.25 in 2019 was observed, though the ratio remained considerably below its earlier peak.
- Overall liquidity insights
- Across the six-year span, the company's liquidity ratios demonstrated variability, with peaks in 2017 across all three metrics indicating a period of enhanced liquidity strength. Post-2017, there was a consistent decline in liquidity indicators, particularly evident in the cash and quick ratios. The fluctuations suggest potential shifts in working capital management or changes in current liabilities and assets composition, emphasizing a need for close monitoring of liquidity positions in subsequent periods.
Current Ratio
Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | ||
---|---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | |||||||
Current assets | |||||||
Current liabilities | |||||||
Liquidity Ratio | |||||||
Current ratio1 | |||||||
Benchmarks | |||||||
Current Ratio, Competitors2 | |||||||
Boeing Co. | |||||||
Caterpillar Inc. | |||||||
Eaton Corp. plc | |||||||
GE Aerospace | |||||||
Honeywell International Inc. | |||||||
Lockheed Martin Corp. | |||||||
RTX Corp. |
Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).
1 2019 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several trends in the company's short-term financial position over the six-year period from 2014 to 2019.
- Current Assets
- Current assets demonstrate a declining trend from 2014 through 2018, decreasing from $10,867 million to $6,619 million. However, there is a slight recovery in 2019 with current assets increasing to $7,139 million. This indicates a reduction in liquid resources available within this timeframe, with a modest improvement at the end of the period.
- Current Liabilities
- Current liabilities decrease overall, though unevenly, from $8,454 million in 2014 to $5,976 million in 2019. Noteworthy is a significant drop occurring between 2016 and 2017, from $8,008 million to $5,045 million, followed by a moderate increase in 2018 to $6,164 million and a slight reduction again in 2019.
- Current Ratio
- The current ratio remains relatively stable during 2014 and 2015 at 1.29, with a minor decline to 1.24 in 2016. In 2017, there is a marked increase to 1.64, suggesting improved short-term liquidity primarily due to the reduction in current liabilities. However, this ratio falls sharply to 1.07 in 2018, reflecting the pronounced decline in current assets during that year. A modest recovery to 1.19 occurs in 2019, aligning with the slight increase in current assets and decrease in liabilities.
Overall, the data illustrates a general contraction in current assets over the period, contrasted by a decline in current liabilities, which leads to fluctuations in liquidity as expressed by the current ratio. The sharp changes especially observed around 2017 and 2018 highlight volatility in the company’s working capital management and potential shifts in operational or financial strategy impacting short-term financial stability.
Quick Ratio
Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | ||
---|---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | |||||||
Cash and equivalents | |||||||
Receivables, less allowances | |||||||
Unbilled receivables (contract assets) | |||||||
Total quick assets | |||||||
Current liabilities | |||||||
Liquidity Ratio | |||||||
Quick ratio1 | |||||||
Benchmarks | |||||||
Quick Ratio, Competitors2 | |||||||
Boeing Co. | |||||||
Caterpillar Inc. | |||||||
Eaton Corp. plc | |||||||
GE Aerospace | |||||||
Honeywell International Inc. | |||||||
Lockheed Martin Corp. | |||||||
RTX Corp. |
Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).
1 2019 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The financial data demonstrates a variable trend in the liquidity position of the company over the six-year period. The total quick assets show a decline from 8,168 million US dollars in 2014 to a low of 4,437 million US dollars in 2018, with a slight recovery to 4,935 million US dollars in 2019. This indicates that the company's most liquid assets decreased significantly over time, with some improvement in the last year observed.
Current liabilities exhibit fluctuations but follow a somewhat irregular trend. The liabilities decreased from 8,454 million US dollars in 2014 to 5,045 million US dollars in 2017, a substantial reduction. Subsequently, they increased again to 6,164 million US dollars in 2018 and slightly declined to 5,976 million US dollars in 2019. These changes suggest variability in short-term obligations, with a notable peak reduction in 2017 followed by a partial rebound.
The quick ratio, which measures the ability to cover current liabilities with quick assets, mirrors the trends seen in both quick assets and current liabilities. The ratio declined from near parity at 0.97 in 2014 to a low of 0.72 in 2018, indicating a weakening short-term liquidity position during this period. However, there is an improvement to 0.83 in 2019, though this does not return the ratio to the levels seen at the beginning of the period. The year 2017 stands out with a quick ratio of 1.22, suggesting a peak in short-term liquidity strength during the time frame examined.
Overall, the data suggest that the company's liquidity experienced a marked deterioration after 2014, reaching a trough in 2018, followed by an incomplete recovery in 2019. The movement in quick ratio aligns with changes in both quick assets and current liabilities, highlighting the company's fluctuating capacity to meet short-term obligations with its most liquid assets.
Cash Ratio
Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | ||
---|---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | |||||||
Cash and equivalents | |||||||
Total cash assets | |||||||
Current liabilities | |||||||
Liquidity Ratio | |||||||
Cash ratio1 | |||||||
Benchmarks | |||||||
Cash Ratio, Competitors2 | |||||||
Boeing Co. | |||||||
Caterpillar Inc. | |||||||
Eaton Corp. plc | |||||||
GE Aerospace | |||||||
Honeywell International Inc. | |||||||
Lockheed Martin Corp. | |||||||
RTX Corp. |
Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).
1 2019 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets remained relatively stable from 2014 to 2017, fluctuating slightly between 3,000 and 3,200 million US dollars. However, a significant decline occurred in 2018, with cash assets dropping sharply to 1,093 million US dollars. A modest recovery is observed in 2019, where total cash assets increased to 1,494 million US dollars, though still substantially lower than the prior four-year period.
- Current Liabilities
- Current liabilities showed a downward trend from 8,454 million US dollars in 2014 to 5,045 million US dollars in 2017. After this decline, there was an increase in liabilities in 2018 to 6,164 million US dollars, followed by a slight decrease to 5,976 million US dollars in 2019. Despite fluctuations, overall current liabilities decreased compared to the initial year, indicating some reduction in short-term obligations over the period.
- Cash Ratio
- The cash ratio, which measures the liquidity position by comparing cash assets to current liabilities, increased consistently from 0.37 in 2014 to a peak of 0.61 in 2017, indicating improved liquidity over these years. This was largely driven by a decrease in current liabilities with relatively stable cash assets. However, in 2018, the cash ratio declined sharply to 0.18 due to the simultaneous drop in total cash assets and increase in current liabilities. In 2019, the ratio slightly improved to 0.25, reflecting partial recovery in cash assets, but liquidity remained weaker than in earlier years.