Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
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- Balance Sheet: Assets
- Common-Size Balance Sheet: Assets
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Operating Profit Margin since 2005
- Debt to Equity since 2005
- Price to Operating Profit (P/OP) since 2005
- Aggregate Accruals
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Liquidity Ratios (Summary)
General Dynamics Corp., liquidity ratios
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Current ratio | ||||||
| Quick ratio | ||||||
| Cash ratio |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
- Current Ratio
- The current ratio showed a generally positive trend from 2015 to 2017, increasing from 1.17 to 1.40, indicating an improvement in the company's short-term liquidity position during this period. However, from 2017 onwards, the ratio experienced a decline, dropping to 1.23 in 2018 and further to 1.18 in 2019. Despite the decline, the current ratio remained above 1.0 throughout the entire period, suggesting that current assets consistently exceeded current liabilities, albeit with decreasing coverage in the latter years.
- Quick Ratio
- The quick ratio followed a similar pattern but was lower in magnitude, reflecting the exclusion of inventory from liquid assets. It increased steadily from 0.85 in 2015 to 0.90 in 2017, demonstrating improved immediate liquidity. Thereafter, the quick ratio declined notably to 0.77 in 2018 and further to 0.73 in 2019, indicating a reduced ability to meet short-term obligations without relying on the sale of inventory. This downward trend in quick ratio from 2017 suggests a relative decrease in highly liquid assets compared to current liabilities.
- Cash Ratio
- The cash ratio displayed a weakening trend over the entire period. Starting at 0.22 in 2015, it decreased to 0.18 in 2016, recovered slightly to 0.23 in 2017, but then fell sharply to 0.07 in 2018 and 0.05 in 2019. This significant reduction indicates a substantial decline in the most liquid asset category—cash and cash equivalents—relative to current liabilities. The pronounced drop in the cash ratio during the last two years highlights a potential tightening of immediate liquidity and a lower cushion of cash available for immediate liabilities.
Current Ratio
General Dynamics Corp., current ratio calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| 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: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current assets
- Current assets showed a steady upward trend from 2015 to 2019. Starting at $14,571 million in 2015, they increased each year, reaching $19,780 million by the end of 2019. The largest year-over-year increase occurred between 2016 and 2017, indicating a period of asset growth.
- Current liabilities
- Current liabilities also exhibited consistent growth over the five-year period. Beginning at $12,445 million in 2015, current liabilities rose annually to reach $16,801 million in 2019. The increase was most pronounced between 2018 and 2019, suggesting rising short-term obligations.
- Current ratio
- The current ratio fluctuated moderately during the period, starting at 1.17 in 2015 and peaking at 1.4 in 2017. Thereafter, it declined to 1.23 in 2018 and further to 1.18 in 2019. Despite the decline after 2017, the ratio remained above 1.0 throughout, indicating that current assets consistently exceeded current liabilities but with a decreasing margin in the last two years.
- Summary
- The overall analysis indicates that while both current assets and current liabilities increased over the five years, liabilities grew at a slightly faster pace in the latter years, leading to a declining current ratio after 2017. This suggests a potential tightening of liquidity, although the company maintained a sufficient level of current assets to cover its short-term liabilities throughout.
Quick Ratio
General Dynamics Corp., quick ratio calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and equivalents | ||||||
| Accounts receivable | ||||||
| Unbilled receivables | ||||||
| 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: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets exhibited a generally increasing trend over the five-year period. Starting from 10,588 million USD at the end of 2015, the value rose steadily to reach 11,840 million USD by the end of 2017. Although there was a slight dip in 2018 to 11,298 million USD, the total quick assets increased again in 2019, reaching the highest value of 12,303 million USD within the observed timeframe.
- Current liabilities
- Current liabilities showed a consistent upward trend across the entire period. The amount grew from 12,445 million USD in 2015 to 16,801 million USD in 2019. Notably, the increase appears to accelerate after 2017, with a larger jump seen between 2018 and 2019 compared to earlier years.
- Quick ratio
- The quick ratio demonstrated a declining trend over the period, indicating a weakening in the company's short-term liquidity position. Starting at 0.85 in 2015, the ratio improved slightly to 0.9 by the end of 2017. However, it dropped significantly thereafter to 0.77 in 2018 and further to 0.73 in 2019, reflecting that the growth in quick assets was outpaced by the increase in current liabilities in the later years.
- Summary
- Despite the increase in total quick assets over the five-year period, the company's capacity to meet short-term obligations, as measured by the quick ratio, declined due to a more rapid increase in current liabilities. This suggests a potential rise in short-term financial pressure from 2018 onwards, which may warrant further monitoring of liquidity management and working capital strategies.
Cash Ratio
General Dynamics Corp., cash ratio calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| 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: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets exhibit a fluctuating trend over the observed period. Starting at 2,785 million US dollars in 2015, cash reserves decreased to 2,334 million in 2016, followed by an increase to a peak of 2,983 million in 2017. Thereafter, a significant drop occurred, with cash assets declining sharply to 963 million in 2018 and further decreasing to 902 million by the end of 2019. This indicates a substantial reduction in liquid cash holdings during the last two years of the period.
- Current Liabilities
- Current liabilities display a consistent upward trajectory throughout the period. The liabilities increased from 12,445 million US dollars in 2015 to 12,846 million in 2016, continuing to grow to 13,099 million in 2017. The upward trend accelerated in subsequent years, reaching 14,739 million in 2018 and 16,801 million in 2019. This steady rise suggests increasing short-term financial obligations.
- Cash Ratio
- The cash ratio reflects the company's liquidity in relation to its current liabilities and has shown a declining trend over the five years. The ratio started at 0.22 in 2015, dipped to 0.18 in 2016, then slightly improved to 0.23 in 2017, coinciding with the peak in cash assets. However, from 2017 onwards, the cash ratio decreased sharply to 0.07 in 2018 and further declined to 0.05 in 2019. Such low ratios indicate a diminished ability to cover short-term liabilities with readily available cash.