Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
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Liquidity Ratios (Summary)
Hubbell Inc., liquidity ratios
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Current ratio | ||||||
| Quick ratio | ||||||
| Cash ratio |
Based on: 10-K (reporting date: 2022-12-31), 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).
The analysis of liquidity ratios over the five-year period reveals several notable trends. The current ratio exhibited a gradual decline from 1.96 in 2018 to a low of 1.67 in 2020, indicating a slight decrease in the company's ability to cover its short-term liabilities with its current assets during that period. However, a recovery is observed in subsequent years, rising to 1.76 in 2021 and returning to 1.86 in 2022, suggesting an improvement in liquidity management.
The quick ratio trends align somewhat with the current ratio but demonstrate a more pronounced dip. Starting at 1.10 in 2018, it declined steadily to 0.91 by 2021, signifying a reduction in the most liquid assets relative to current liabilities. The rebound to 1.10 in 2022 indicates a restoration of liquid asset levels excluding inventories and other less liquid components.
The cash ratio shows a different pattern, with a relatively stable level around 0.24 to 0.28 between 2018 and 2021, implying consistent cash and cash equivalents in proportion to current liabilities. A significant increase to 0.42 in 2022 suggests a strategic accumulation of cash reserves or improved cash flow management, enhancing the most conservative measure of liquidity.
- Current Ratio
- A decline from 1.96 to 1.67 occurred between 2018 and 2020, followed by a rebound to 1.86 in 2022, indicating fluctuating but overall stable ability to meet short-term obligations.
- Quick Ratio
- Decreased from 1.10 in 2018 to 0.91 in 2021, then returned to 1.10 in 2022, reflecting changes in liquid assets available for covering current liabilities.
- Cash Ratio
- Remained relatively stable in the range of 0.23–0.28 through 2021 before a notable increase to 0.42 in 2022, signifying strengthened cash reserves relative to current liabilities.
Current Ratio
Hubbell Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| 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. | ||||||
| Current Ratio, Sector | ||||||
| Capital Goods | ||||||
| Current Ratio, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several important trends related to the company's liquidity position over the five-year period from 2018 to 2022.
- Current Assets
- The current assets display some fluctuation but overall show an increasing trend. After a slight decrease from 1,643,700 thousand US dollars in 2018 to 1,574,200 thousand US dollars in 2019, the current assets stabilized around 1,587,600 thousand US dollars in 2020. A significant increase was observed in 2021, rising to 1,879,300 thousand US dollars, and this upward trend continued to 2,021,400 thousand US dollars in 2022.
- Current Liabilities
- Current liabilities increased steadily throughout the period. Starting from 839,300 thousand US dollars in 2018, the liabilities grew gradually to 844,900 thousand in 2019, then rose more sharply to 948,200 thousand in 2020. The upward momentum continued with 1,065,200 thousand in 2021 and reached 1,088,500 thousand in 2022.
- Current Ratio
- The current ratio, a key indicator of liquidity, showed a declining trend from 1.96 in 2018 to a low of 1.67 in 2020, suggesting that liquidity may have weakened during this timeframe. However, a recovery occurred in 2021 with the ratio increasing to 1.76 and further improving to 1.86 in 2022, indicating a strengthening ability to cover short-term obligations.
In summary, while current liabilities steadily increased, the rise in current assets eventually outpaced liabilities starting in 2021, leading to an improvement in the current ratio. This suggests enhanced liquidity conditions after a period of contraction around 2019-2020. Maintaining the current ratio above 1.5 since 2018 indicates the company generally kept a comfortable margin to meet its short-term liabilities.
Quick Ratio
Hubbell Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | ||||||
| Short-term investments | ||||||
| Accounts receivable, net of allowances | ||||||
| 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. | ||||||
| Quick Ratio, Sector | ||||||
| Capital Goods | ||||||
| Quick Ratio, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several important trends over the five-year period from 2018 to 2022 regarding liquidity and the company's ability to meet short-term obligations.
- Total Quick Assets
- This metric shows a relatively stable pattern from 2018 to 2021, fluctuating slightly but remaining in the range of approximately 879,200 to 970,900 thousand US dollars. Notably, there is a significant increase in 2022, where total quick assets rise substantially to 1,196,400 thousand US dollars. This surge suggests an enhancement in highly liquid assets available to cover immediate liabilities.
- Current Liabilities
- Current liabilities demonstrate a consistent upward trend throughout the period. From 839,300 thousand US dollars in 2018, liabilities increase steadily each year, reaching 1,088,500 thousand US dollars in 2022. This indicates growing short-term financial obligations, which the company must manage carefully.
- Quick Ratio
- The quick ratio begins at a relatively healthy level of 1.1 in 2018, indicating that quick assets slightly exceed current liabilities at that time. However, it declines progressively over the next three years, reaching a low of 0.91 by the end of 2021. This downward movement reflects a diminishing buffer of liquid assets relative to immediate liabilities, potentially signaling increasing liquidity risk during this period. Encouragingly, in 2022, the ratio rebounds back to 1.1, corresponding with the rise in quick assets, thus restoring a more comfortable liquidity position.
In summary, while current liabilities have steadily increased over the years, the company experienced a contraction in its quick ratio until 2021, highlighting a possible strain on short-term financial flexibility. The marked improvement in total quick assets and the quick ratio in 2022 suggest proactive measures or favorable conditions that have strengthened liquidity. Maintaining or building upon this trend will be important to ensure continued ability to meet short-term obligations.
Cash Ratio
Hubbell Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | ||||||
| Short-term investments | ||||||
| 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. | ||||||
| Cash Ratio, Sector | ||||||
| Capital Goods | ||||||
| Cash Ratio, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total cash assets
- The total cash assets exhibit an overall increasing trend over the five-year period. Starting at 198,200 thousand US dollars at the end of 2018, there is a slight decline in 2019 to 196,200 thousand US dollars. However, from 2019 onwards, the total cash assets rise steadily each year, reaching 268,900 thousand US dollars in 2020, 295,600 thousand US dollars in 2021, and culminating at 454,800 thousand US dollars by the end of 2022. This represents a significant accumulation of cash assets, especially notable between 2021 and 2022.
- Current liabilities
- Current liabilities show a consistent upward trajectory throughout the period. Beginning at 839,300 thousand US dollars in 2018, they increase marginally to 844,900 thousand US dollars in 2019. The rise becomes more pronounced in subsequent years: 948,200 thousand US dollars in 2020, 1,065,200 thousand US dollars in 2021, and reaching 1,088,500 thousand US dollars in 2022. This steady escalation in current liabilities suggests growing short-term obligations over the analyzed timeframe.
- Cash ratio
- The cash ratio, which measures liquidity by comparing cash assets to current liabilities, remained relatively stable between 2018 and 2021, fluctuating narrowly between 0.23 and 0.28. In 2018, the ratio was 0.24, decreasing slightly to 0.23 in 2019, then increasing back to 0.28 in both 2020 and 2021. A marked improvement is observed in 2022, where the cash ratio rises significantly to 0.42. This suggests enhanced liquidity and a stronger cash position relative to current liabilities in the latest period.