Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Generac Holdings Inc., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 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
- The current ratio demonstrates fluctuating but overall moderate stability over the observed periods. It starts at 2.1 in early 2018, then experiences a slight decline in mid-to-late 2018 before recovering and rising to a peak of 2.66 by mid-2020. After this peak, the ratio declines steadily through 2021 and into the first half of 2022, reaching a low of 1.6 before a moderate rebound to 2.13 by June 2022. This pattern suggests that liquidity was relatively strong through 2020 but weakened somewhat in 2021, with signs of recovery by mid-2022.
- Quick Ratio
- The quick ratio follows a broadly similar trajectory to the current ratio but shows greater volatility. It begins below 1 at 0.99 in Q1 2018, dipping to 0.86 by Q2 2019 before rising sharply to a peak of 1.64 in Q3 2020. This peak is followed by a significant decline through 2021, dropping to as low as 0.6 in Q4 2021, showing a marked decrease in more liquid assets relative to current liabilities. By mid-2022, the quick ratio partially recovers to 0.99, indicating some improvement in liquidity but still reflecting tighter conditions compared to earlier peaks.
- Cash Ratio
- The cash ratio exhibits notable variation, beginning at a low of 0.35 in Q1 2018 and generally trending upwards until reaching its highest level of 1.05 in Q1 2021. This increase suggests an accumulation of cash or cash equivalents relative to current liabilities during this period. However, after this peak, the cash ratio drops sharply to a low of 0.13 in Q4 2021, indicating a significant reduction in highly liquid assets. A rebounding trend is observed in early 2022, with the ratio rising again to 0.4 by mid-year, reflecting a cautious recovery in cash reserves.
Current Ratio
Generac Holdings Inc., current ratio calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||
| Current assets | 2,491,311) | 2,125,401) | 1,848,464) | 1,923,572) | 1,692,533) | 1,857,607) | 1,669,733) | 1,480,336) | 1,297,106) | 1,208,721) | 1,195,829) | 1,137,431) | 1,051,710) | 1,062,795) | 1,120,769) | 1,039,957) | 930,436) | 866,845) | ||||||
| Current liabilities | 1,172,176) | 1,253,158) | 1,155,907) | 1,018,014) | 836,249) | 710,265) | 641,524) | 556,258) | 486,720) | 483,016) | 497,064) | 476,016) | 480,363) | 515,979) | 560,706) | 553,113) | 480,049) | 412,637) | ||||||
| Liquidity Ratio | ||||||||||||||||||||||||
| Current ratio1 | 2.13 | 1.70 | 1.60 | 1.89 | 2.02 | 2.62 | 2.60 | 2.66 | 2.66 | 2.50 | 2.41 | 2.39 | 2.19 | 2.06 | 2.00 | 1.88 | 1.94 | 2.10 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Current Ratio, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | 1.25 | 1.30 | 1.33 | 1.36 | 1.35 | 1.33 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Caterpillar Inc. | 1.45 | 1.44 | 1.46 | 1.61 | 1.56 | 1.60 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Eaton Corp. plc | 0.97 | 0.99 | 1.04 | 1.27 | 1.10 | 1.51 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| GE Aerospace | 1.13 | 1.19 | 1.28 | 1.80 | 1.81 | 1.96 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Honeywell International Inc. | 1.20 | 1.21 | 1.30 | 1.29 | 1.41 | 1.43 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lockheed Martin Corp. | 1.27 | 1.27 | 1.42 | 1.42 | 1.36 | 1.38 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| RTX Corp. | 1.10 | 1.16 | 1.19 | 1.23 | 1.17 | 1.17 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 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 Q2 2022 Calculation
Current ratio = Current assets ÷ Current liabilities
= 2,491,311 ÷ 1,172,176 = 2.13
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals notable trends in liquidity and working capital management over the observed periods.
- Current Assets
- Current assets exhibit a generally upward trend from March 31, 2018, through June 30, 2022, rising from approximately 867 million USD to nearly 2.5 billion USD. There are intermittent increases and occasional slight declines, such as between March 31, 2021, and June 30, 2021, yet the overall direction is a substantial increase, suggesting growth in liquid and short-term assets.
- Current Liabilities
- Current liabilities also show an increasing pattern, advancing from roughly 413 million USD at the start of the series to about 1.17 billion USD in mid-2022. The increase is relatively steady, with a more pronounced rise beginning in early 2021 and peaking around March 31, 2022. This indicates a growing level of short-term obligations over time, which may reflect expanded operations or increased short-term financing.
- Current Ratio
- The current ratio fluctuates throughout the period. It begins at 2.1 in March 2018, declines gradually reaching a low of 1.6 at the end of 2021, before rebounding to 2.13 by June 2022. The early period shows ratios generally above 2, indicating a strong liquidity position. The dip below 2 during late 2021 and early 2022 indicates a tightening of liquidity, although the subsequent recovery suggests an improvement. These fluctuations may relate to changes in working capital management or shifts in either current assets or liabilities.
In summary, both current assets and liabilities have increased significantly, reflecting company growth or operational scale changes. The current ratio’s trend shows periods of stronger and weaker liquidity, with an overall maintenance of liquidity above a threshold commonly considered safe (around or above 1.5). The recent improvement in the current ratio signals a positive adjustment in liquidity management after a period of contraction.
Quick Ratio
Generac Holdings Inc., quick ratio calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||
| Cash and cash equivalents | 467,140) | 206,023) | 147,339) | 423,726) | 390,086) | 744,814) | 655,128) | 513,944) | 396,734) | 307,456) | 322,883) | 216,038) | 110,367) | 161,266) | 224,482) | 174,001) | 111,714) | 146,162) | ||||||
| Accounts receivable, less allowance for credit losses | 692,291) | 609,870) | 546,466) | 510,670) | 480,889) | 428,702) | 374,906) | 398,240) | 322,937) | 312,013) | 319,538) | 373,591) | 341,535) | 284,612) | 326,133) | 341,758) | 311,668) | 262,170) | ||||||
| Total quick assets | 1,159,431) | 815,893) | 693,805) | 934,396) | 870,975) | 1,173,516) | 1,030,034) | 912,184) | 719,671) | 619,469) | 642,421) | 589,629) | 451,902) | 445,878) | 550,615) | 515,759) | 423,382) | 408,332) | ||||||
| Current liabilities | 1,172,176) | 1,253,158) | 1,155,907) | 1,018,014) | 836,249) | 710,265) | 641,524) | 556,258) | 486,720) | 483,016) | 497,064) | 476,016) | 480,363) | 515,979) | 560,706) | 553,113) | 480,049) | 412,637) | ||||||
| Liquidity Ratio | ||||||||||||||||||||||||
| Quick ratio1 | 0.99 | 0.65 | 0.60 | 0.92 | 1.04 | 1.65 | 1.61 | 1.64 | 1.48 | 1.28 | 1.29 | 1.24 | 0.94 | 0.86 | 0.98 | 0.93 | 0.88 | 0.99 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Quick Ratio, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | 0.28 | 0.29 | 0.34 | 0.38 | 0.38 | 0.37 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Caterpillar Inc. | 0.81 | 0.84 | 0.89 | 1.00 | 1.02 | 1.08 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Eaton Corp. plc | 0.50 | 0.51 | 0.54 | 0.69 | 0.44 | 0.66 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| GE Aerospace | 0.75 | 0.82 | 0.93 | 0.90 | 0.90 | 1.06 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Honeywell International Inc. | 0.82 | 0.84 | 0.94 | 0.96 | 1.06 | 1.08 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lockheed Martin Corp. | 1.03 | 1.03 | 1.15 | 1.18 | 1.10 | 1.09 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| RTX Corp. | 0.71 | 0.76 | 0.81 | 0.82 | 0.79 | 0.79 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 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 Q2 2022 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 1,159,431 ÷ 1,172,176 = 0.99
2 Click competitor name to see calculations.
The analysis of the reported liquidity metrics reveals several notable trends over the evaluated periods. Total quick assets initially showed a fluctuating pattern with moderate growth from early 2018 through to the end of 2019, increasing from approximately $408 million to $642 million. This was followed by a more pronounced upward trend throughout 2020, peaking at just over $1 billion by the end of that year. In 2021, the total quick assets exhibited volatility, rising sharply to a peak of around $1.17 billion in the first quarter, then declining significantly toward the end of the year, and partially recovering in the first half of 2022.
Current liabilities mirrored a somewhat steady growth trajectory overall, starting at about $413 million in early 2018 and reaching approximately $497 million by the end of 2019. A substantial increase occurred during 2020 and 2021, with current liabilities nearly doubling to surpass $1.25 billion by mid-2022. This sharp rise indicates an increasing short-term financial obligation burden over the analyzed period.
The quick ratio, indicating short-term liquidity, reflected these changes decisively. Initially close to parity (0.99) at the start of 2018, the ratio declined below 1.0 in mid-2018 and early 2019, signaling a potential liquidity concern. However, from mid-2019 through 2020, the quick ratio improved significantly, reaching peaks above 1.6 during 2020, suggesting improved capability to cover current liabilities without relying on inventory conversion. Nonetheless, in 2021, the quick ratio declined again, moving below 1.0 by the third quarter and hitting lows around 0.6 in the last quarter of 2021 and first half of 2022, which hints at a reduction in liquidity cushion despite high absolute quick asset levels. The quick ratio showed some recovery to nearly 1.0 by mid-2022.
In summary, the company saw substantial growth in quick assets and current liabilities over the analyzed time frame, with sharp increases observed particularly in 2020 and 2021. The liquidity position, as measured by the quick ratio, exhibited periods of strength and weakness, with significant improvement through 2020 but weakening in 2021 correlating with the rapid increase in liabilities. The recent recovery in the quick ratio suggests some stabilization in liquidity, but the elevated current liability level remains a key area for ongoing monitoring.
- Total Quick Assets
- Showed growth from early 2018 to end-2019, rapid increase in 2020, peak in early 2021, followed by volatility and partial recovery in 2022.
- Current Liabilities
- Increased steadily from 2018 through 2019, then rose sharply during 2020 and 2021, reaching record highs by mid-2022.
- Quick Ratio
- Decreased below 1.0 in early periods, improved markedly during 2020, but declined again throughout 2021 to lows in early 2022 before improving more recently.
Cash Ratio
Generac Holdings Inc., cash ratio calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||
| Cash and cash equivalents | 467,140) | 206,023) | 147,339) | 423,726) | 390,086) | 744,814) | 655,128) | 513,944) | 396,734) | 307,456) | 322,883) | 216,038) | 110,367) | 161,266) | 224,482) | 174,001) | 111,714) | 146,162) | ||||||
| Total cash assets | 467,140) | 206,023) | 147,339) | 423,726) | 390,086) | 744,814) | 655,128) | 513,944) | 396,734) | 307,456) | 322,883) | 216,038) | 110,367) | 161,266) | 224,482) | 174,001) | 111,714) | 146,162) | ||||||
| Current liabilities | 1,172,176) | 1,253,158) | 1,155,907) | 1,018,014) | 836,249) | 710,265) | 641,524) | 556,258) | 486,720) | 483,016) | 497,064) | 476,016) | 480,363) | 515,979) | 560,706) | 553,113) | 480,049) | 412,637) | ||||||
| Liquidity Ratio | ||||||||||||||||||||||||
| Cash ratio1 | 0.40 | 0.16 | 0.13 | 0.42 | 0.47 | 1.05 | 1.02 | 0.92 | 0.82 | 0.64 | 0.65 | 0.45 | 0.23 | 0.31 | 0.40 | 0.31 | 0.23 | 0.35 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Cash Ratio, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | 0.14 | 0.15 | 0.20 | 0.23 | 0.24 | 0.24 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Caterpillar Inc. | 0.21 | 0.22 | 0.31 | 0.36 | 0.39 | 0.43 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Eaton Corp. plc | 0.07 | 0.06 | 0.08 | 0.11 | 0.06 | 0.20 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| GE Aerospace | 0.37 | 0.44 | 0.54 | 0.52 | 0.50 | 0.67 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Honeywell International Inc. | 0.43 | 0.49 | 0.59 | 0.60 | 0.68 | 0.71 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lockheed Martin Corp. | 0.11 | 0.12 | 0.26 | 0.18 | 0.18 | 0.20 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| RTX Corp. | 0.13 | 0.17 | 0.22 | 0.22 | 0.23 | 0.24 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 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 Q2 2022 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 467,140 ÷ 1,172,176 = 0.40
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in liquidity and working capital management across the periods presented.
- Total Cash Assets
- The total cash assets exhibit significant fluctuations over the timeframe. Initially, cash holdings were moderate, starting at approximately $146 million in early 2018, then showing variability with a downward trend mid-2018, followed by sharp increases in certain quarters such as the end of 2019 and through 2020. Peak levels are observed at the end of 2020, reaching over $655 million, with a subsequent decline during 2021, hitting a low point in late 2021 and early 2022, before rising again moderately by mid-2022. These fluctuations suggest periods of active cash management or varying cash inflows possibly related to operational activities or financing events.
- Current Liabilities
- Current liabilities demonstrate a generally upward trajectory across the period. Starting at around $413 million in early 2018, there is a progressive increase each quarter, with values surpassing the $1 billion mark by early 2021 and continuing to rise through mid-2022. This steady increase indicates expanding short-term obligations or greater utilization of current liabilities to finance operations or investments, which may imply increased operational scale or changes in credit terms.
- Cash Ratio
- The cash ratio, representing the company's ability to cover current liabilities with cash and cash equivalents, shows considerable volatility. Early in the timeline, the ratio fluctuated between approximately 0.23 and 0.65, indicating periods of relatively low to moderate liquidity. Notably, the cash ratio rises steadily through 2020, peaking slightly above 1.0 at the beginning of 2021, suggesting that cash assets were sufficient to cover current liabilities at that time. However, a marked decline follows in 2021, with the ratio dropping to as low as 0.13 by late 2021, reflecting reduced cash coverage relative to growing liabilities. By mid-2022, the ratio recovers somewhat to 0.4, though this remains below earlier peak levels, pointing to a cautious but improving liquidity position.
In summary, the company experienced increasing current liabilities throughout the period, with cash assets varying significantly, achieving optimal liquidity coverage in late 2020 and early 2021. The subsequent decline in the cash ratio in 2021 indicates potential liquidity pressure, despite a partial recovery in early 2022. This pattern suggests a need for continued focus on cash management and short-term debt obligations to ensure financial stability.