Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
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- Statement of Comprehensive Income
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- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Total Asset Turnover since 2005
- Analysis of Revenues
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Liquidity Ratios (Summary)
Illinois Tool Works 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), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
- Current Ratio
- The current ratio exhibited an overall fluctuating trend between 2017 and 2021. Initially, it showed a gradual increase from 2.24 in Q1 2017 to a peak of 2.41 in Q3 2017, followed by a decline through 2018, reaching a low point around 1.53 in Q1 2019. Subsequently, there was a sharp recovery in 2019, with the ratio peaking again near 2.9 in Q4 2019. The ratio then decreased moderately in 2020 and early 2021, ending at 1.84 by Q4 2021. This pattern indicates variability in the company's short-term liquidity, with periods of strong current asset coverage followed by contractions potentially driven by operational or market conditions.
- Quick Ratio
- The quick ratio followed a similar trajectory to the current ratio, though consistently lower in absolute terms as expected due to the exclusion of inventory. From Q1 2017 to Q3 2017, it rose from 1.75 to 1.9, then declined across 2018 to a low near 1.13 in Q1 2019. A notable rebound occurred in late 2019, peaking at 2.06 in Q4 2019, suggesting improved liquidity in more readily liquid assets. Through 2020 and into 2021, the quick ratio demonstrated relative stability with minor declines in late 2021, finishing at 1.26. This demonstrates the company's ability to meet near-term liabilities without relying on inventory sales, albeit with periods of tightening liquidity.
- Cash Ratio
- The cash ratio showed more pronounced variability compared to the other ratios, reflecting fluctuations in the most liquid assets. Starting at 0.87 in Q1 2017, the ratio increased gradually to just over 1.0 by Q4 2017. However, a sharp decline began in early 2018, reaching lows close to 0.42 by Q4 2018, indicating a reduction in cash and equivalents relative to current liabilities. The ratio partially recovered throughout 2019, attaining 0.92 by Q4 2019. In 2020, it fluctuated with a decline in early 2020 followed by a revival in late 2020 to nearly 1.0. By the end of 2021, the cash ratio again decreased to 0.44. These shifts reflect varying cash management strategies and possible responses to external economic factors, impacting the company's immediate liquidity buffer.
Current Ratio
Illinois Tool Works 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 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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: 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), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- The current assets exhibit moderate fluctuations over the analyzed quarters. Starting at approximately 6,430 million USD in early 2017, current assets increased steadily until the end of 2017, peaking near 7,278 million USD. However, in 2018, there is a noticeable decline, with figures falling from 6,423 million USD in the first quarter to a low of 5,778 million USD by year-end. This decline stabilizes in 2019 with values hovering around 6,200 million USD, and then further decreases are seen in early 2020, reaching a low near 5,506 million USD. Subsequently, a recovery phase occurs through 2021, with current assets climbing back above 6,500 million USD by the last quarter, indicating a partial rebound.
- Current Liabilities
- Current liabilities show a more variable pattern. Beginning at 2,875 million USD in the first quarter of 2017, liabilities generally increase through 2018, reaching over 3,500 million USD. Noteworthy volatility occurs in 2019, with liabilities dropping significantly to approximately 2,188 million USD in the second quarter and remaining relatively low throughout that year. This reduction may indicate debt repayment or improved short-term obligation management. In 2020, liabilities rise again gradually, peaking at around 2,589 million USD by year-end. The trend continues upward in 2021, with liabilities approaching 3,470 million USD by the end of the period, suggesting increased short-term borrowing or obligations.
- Current Ratio
- The current ratio reflects the relationship between current assets and current liabilities, and varies accordingly. It starts strong, above 2.2 in early 2017, and reaches a period high near 2.41 during late 2017, indicating solid short-term liquidity. A decline occurs in 2018, falling below 1.65 during the second half of the year, signifying tighter liquidity conditions. In 2019, the ratio improves markedly, climbing above 2.8 for most of the year, which suggests a favorable liquidity position. This improvement tapers in 2020, with fluctuating ratios between 2.37 and 2.75, before declining again in 2021, ending near 1.84, which is the lowest point in the analyzed timeframe and may indicate pressure on liquidity.
- Summary of Trends
- Overall, the data reveal cyclical patterns in liquidity-related measures, characterized by periods of strengthening and weakening. Current assets demonstrated a moderate increase initially, followed by a decline and then recovery, suggesting varying levels of asset management or operational cash flows. Current liabilities fluctuated more markedly, with notable reductions during 2019 implying improved liability management or strategic pay-down of debts, and subsequent increases indicating renewed short-term obligations. The current ratio mirrors these movements, peaking in 2019 to reflect strong liquidity, but declining toward the latter part of 2021, potentially signaling emerging short-term financial constraints. The interplay among these variables suggests that while the company managed liquidity effectively during certain periods, recent trends may require closer attention to maintain adequate short-term financial flexibility.
Quick Ratio
Illinois Tool Works 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 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | |||||||
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| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||
| Cash and equivalents | ||||||||||||||||||||||||||
| Trade 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: 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), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total Quick Assets
- The total quick assets demonstrate fluctuations over the examined periods, starting at 5,027 million USD in the first quarter of 2017, peaking just below 5,722 million USD by the fourth quarter of 2017. A downward trend follows throughout 2018, with values declining to 4,126 million USD by the end of the year. The asset base partially recovers during 2019, reaching above 4,400 million USD, but drops again in early 2020 to a low of 3,854 million USD. Subsequently, there is a notable recovery through late 2020 and into 2021, where quick assets rise to over 5,000 million USD before a decline is observed in the last quarters up to the end of 2021.
- Current Liabilities
- Current liabilities exhibit more variability across quarters. Starting around 2,875 million USD in early 2017, liabilities generally increase, peaking at 3,961 million USD in the first quarter of 2019. There is an anomalous sharp decline during the subsequent periods in 2019, bottoming near 2,154 million USD at the end of that year. A gradual increase resumes in 2020 and continues through 2021, culminating in a peak around 3,470 million USD by the last quarter of 2021.
- Quick Ratio
- The quick ratio reflects the balance between quick assets and current liabilities and shows considerable volatility. Initially strong at 1.75 in early 2017, it reaches a near high of 1.9 by the end of 2017 before declining steadily through 2018, falling to approximately 1.16 by the year's end. A marked improvement occurs in 2019, with the ratio climbing close to 2.06 by the last quarter, indicating a significant strengthening of liquidity. Although a small dip occurs in early 2020, the ratio remains relatively stable and around or above 1.8 throughout the subsequent quarters. Toward the end of 2021, a decline is noted again, with the ratio decreasing to 1.26 in the final quarter.
- Overall Analysis
- Across the time series, quick assets and current liabilities both exhibit cyclical patterns and notable volatility. The quick ratio trends suggest periods of both strengthening and weakening liquidity positions. Specifically, the rapid decline in liabilities during late 2019, combined with stable or increasing quick assets, led to a peak in liquidity ratios during that period. Conversely, the decline in quick assets coupled with rising liabilities in 2018 and late 2021 indicates liquidity pressure during those periods. The patterns indicate a dynamic liquidity management approach, potentially reflecting responses to external economic conditions and internal operational factors.
Cash Ratio
Illinois Tool Works 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 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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: 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), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
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 demonstrate notable fluctuations over the analyzed periods. Initially, there is an upward trend from March 2017 (2,493 million USD) up to December 2017 (3,094 million USD). This is followed by a decline throughout 2018, reaching a low of 1,504 million USD by December 2018. The year 2019 exhibits some recovery with a gradual increase peaking at 1,981 million USD in December 2019. However, during 2020, cash assets again fluctuate, initially declining to 1,430 million USD in March and subsequently climbing to 2,564 million USD by December 2020. In 2021, the cash assets decline steadily, ending at 1,527 million USD in December. Overall, cash assets reveal cyclical characteristics without a clear long-term growth or decline pattern.
- Current Liabilities
- Current liabilities exhibit considerable volatility with overall increasing levels across the timeframe. Starting at 2,875 million USD in March 2017, liabilities fluctuate but generally show an upward trajectory, peaking at 3,961 million USD in March 2019. After this peak, there is a substantial drop in mid-2019 to approximately 2,154 million USD in December 2019. During 2020 and 2021, liabilities increase steadily once again, with the highest value of 3,470 million USD recorded in December 2021. The variations suggest changing short-term obligations, possibly linked to operational cycles or strategic financial management.
- Cash Ratio
- The cash ratio follows a pattern that broadly mirrors the variations in cash assets relative to current liabilities, reflecting liquidity changes. In early periods, the ratio hovers close to or just below 1.00, indicating cash assets slightly less than or nearly equal to current liabilities. This ratio declines sharply in 2018, reaching as low as 0.42 by December 2018, reflecting diminished liquidity. The ratio improves during 2019, increasing to 0.92 by December, before experiencing a decline and subsequent rise through 2020 and early 2021. The end of 2021 shows a lower cash ratio of 0.44, signaling a relatively weaker liquidity position. The ratio’s fluctuations highlight varying ability to cover short-term obligations solely with cash, pointing to periods of stronger and weaker liquidity management.
- Overall Trends and Insights
- Across the timeline analyzed, there is a cyclical trend observed in both cash assets and current liabilities, with corresponding impacts on the cash ratio. The periods of higher current liabilities are often associated with reduced cash ratios, indicating potential pressure on short-term liquidity. The fluctuations in cash assets do not consistently correlate with liabilities, suggesting strategic cash management or external factors influencing working capital. The declining cash ratio in late 2021 may warrant attention concerning short-term financial stability. Nonetheless, recovery periods in cash ratios and assets indicate some capacity to adjust liquidity in response to changing liabilities.