Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Motorola Solutions Inc., liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Current ratio | 1.00 | 1.15 | 1.33 | 1.24 | 1.21 | |
| Quick ratio | 0.79 | 0.84 | 1.07 | 1.03 | 1.01 | |
| Cash ratio | 0.30 | 0.29 | 0.46 | 0.36 | 0.29 |
Based on: 10-K (reporting date: 2023-12-31), 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).
The liquidity position of the organization exhibited a period of expansion between 2019 and 2021, followed by a notable contraction through 2023. The overall trend suggests a shift toward a leaner liquidity structure, resulting in a tighter margin for meeting short-term obligations by the end of the analyzed period.
- Current Ratio
- The current ratio increased from 1.21 in 2019 to a peak of 1.33 in 2021, indicating a growing buffer of current assets relative to current liabilities. However, a downward trend emerged thereafter, with the ratio declining to 1.15 in 2022 and reaching 1.00 by December 31, 2023. This trajectory suggests that current assets now exactly equal current liabilities, leaving no excess liquidity margin.
- Quick Ratio
- Consistent with the current ratio, the quick ratio rose from 1.01 in 2019 to 1.07 in 2021. A significant decline occurred in 2022, where the ratio fell to 0.84, and it further decreased to 0.79 by 2023. Because this ratio excludes inventory, the decline below 1.00 indicates that liquid assets alone are no longer sufficient to cover all current liabilities, suggesting an increased reliance on the conversion of inventory into cash to meet short-term debts.
- Cash Ratio
- The cash ratio demonstrated a sharp increase from 0.29 in 2019 to 0.46 in 2021, reflecting a temporary strengthening of the most liquid asset reserves. This was followed by a steep correction in 2022, returning to 0.29, and remaining relatively stable at 0.30 in 2023. The volatility in this metric suggests a strategic deployment or redistribution of cash reserves occurring between 2021 and 2022.
In summary, while the period from 2019 to 2021 was characterized by strengthening liquidity, the subsequent two years show a concerted decline across all three metrics. The convergence of the current ratio to 1.00 and the drop of the quick ratio below 1.00 highlight a transition toward a more constrained short-term financial position.
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Current Ratio
Motorola Solutions Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 5,725) | 5,255) | 5,412) | 4,327) | 4,178) | |
| Current liabilities | 5,736) | 4,560) | 4,063) | 3,489) | 3,439) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 1.00 | 1.15 | 1.33 | 1.24 | 1.21 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Apple Inc. | 0.99 | 0.88 | 1.07 | 1.36 | — | |
| Arista Networks Inc. | 4.39 | 4.29 | 4.34 | — | — | |
| Cisco Systems Inc. | 1.38 | 1.43 | 1.49 | — | — | |
| Dell Technologies Inc. | 0.82 | 0.80 | 0.80 | — | — | |
| Lumentum Holdings Inc. | 4.38 | 4.38 | 3.67 | — | — | |
| Super Micro Computer Inc. | 2.31 | 1.91 | 1.93 | — | — | |
| Current Ratio, Sector | ||||||
| Technology Hardware & Equipment | 1.05 | 0.96 | 1.09 | — | — | |
| Current Ratio, Industry | ||||||
| Information Technology | 1.41 | 1.37 | 1.55 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= 5,725 ÷ 5,736 = 1.00
2 Click competitor name to see calculations.
The liquidity position of the organization exhibited a cyclical trend between 2019 and 2023, characterized by an initial improvement in the current ratio followed by a steady decline. While both current assets and current liabilities increased in absolute terms over the five-year period, the growth rate of liabilities outpaced that of assets, resulting in a compression of the liquidity margin.
- Current Asset Trends
- Current assets demonstrated a general upward trajectory, increasing from US$ 4,178 million in 2019 to US$ 5,725 million by the end of 2023. A significant expansion was noted between 2020 and 2021, followed by a marginal contraction in 2022 and a subsequent recovery in 2023.
- Current Liability Trends
- Current liabilities experienced consistent and accelerating growth throughout the analyzed period. Starting at US$ 3,439 million in 2019, these obligations rose to US$ 5,736 million in 2023. The most substantial increase occurred between 2022 and 2023, where liabilities grew by approximately US$ 1,176 million.
- Current Ratio Interpretation
- The current ratio peaked at 1.33 in 2021, reflecting a period of strengthened short-term solvency. However, a downward trend emerged in the subsequent years, with the ratio falling to 1.15 in 2022 and reaching 1.00 by December 31, 2023. The current ratio of 1.00 indicates that current assets now exactly equal current liabilities, leaving no surplus margin to cover unexpected short-term obligations.
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Quick Ratio
Motorola Solutions Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 1,705) | 1,325) | 1,874) | 1,254) | 1,001) | |
| Accounts receivable, net | 1,710) | 1,518) | 1,386) | 1,390) | 1,412) | |
| Contract assets | 1,102) | 974) | 1,105) | 933) | 1,046) | |
| Total quick assets | 4,517) | 3,817) | 4,365) | 3,577) | 3,459) | |
| Current liabilities | 5,736) | 4,560) | 4,063) | 3,489) | 3,439) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 0.79 | 0.84 | 1.07 | 1.03 | 1.01 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Apple Inc. | 0.84 | 0.71 | 0.91 | 1.22 | — | |
| Arista Networks Inc. | 3.16 | 3.05 | 3.54 | — | — | |
| Cisco Systems Inc. | 1.13 | 1.16 | 1.32 | — | — | |
| Dell Technologies Inc. | 0.52 | 0.49 | 0.59 | — | — | |
| Lumentum Holdings Inc. | 3.57 | 3.92 | 3.25 | — | — | |
| Super Micro Computer Inc. | 1.16 | 0.75 | 0.72 | — | — | |
| Quick Ratio, Sector | ||||||
| Technology Hardware & Equipment | 0.84 | 0.73 | 0.90 | — | — | |
| Quick Ratio, Industry | ||||||
| Information Technology | 1.12 | 1.09 | 1.30 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 4,517 ÷ 5,736 = 0.79
2 Click competitor name to see calculations.
The liquidity profile of the entity has transitioned from a position of stability and sufficiency to a more constrained state over the five-year period ending December 31, 2023. While liquid assets have increased in absolute terms, the rate of growth in short-term obligations has outpaced asset accumulation, leading to a decline in the immediate coverage of liabilities.
- Quick Asset Analysis
- Total quick assets showed a general upward trend, increasing from 3,459 million US$ in 2019 to 4,517 million US$ in 2023. A temporary contraction occurred in 2022, where assets dipped to 3,817 million US$, before recovering to a five-year high in 2023.
- Current Liabilities Growth
- A consistent and accelerating increase in current liabilities is observed. Obligations rose from 3,439 million US$ in 2019 to 5,736 million US$ in 2023. The most significant growth occurred between 2021 and 2023, during which liabilities increased by approximately 41%.
- Quick Ratio Interpretation
- The quick ratio remained above 1.0 between 2019 and 2021, peaking at 1.07, which indicated that the entity possessed more than enough liquid assets to satisfy its current liabilities without relying on inventory liquidation. However, a downward trend emerged in the final two years, with the ratio falling to 0.84 in 2022 and 0.79 in 2023. This progression indicates a diminishing margin of safety and a heightened reliance on cash flow or other financing sources to meet short-term obligations.
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Cash Ratio
Motorola Solutions Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 1,705) | 1,325) | 1,874) | 1,254) | 1,001) | |
| Total cash assets | 1,705) | 1,325) | 1,874) | 1,254) | 1,001) | |
| Current liabilities | 5,736) | 4,560) | 4,063) | 3,489) | 3,439) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.30 | 0.29 | 0.46 | 0.36 | 0.29 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Apple Inc. | 0.42 | 0.31 | 0.50 | 0.86 | — | |
| Arista Networks Inc. | 2.62 | 2.34 | 3.07 | — | — | |
| Cisco Systems Inc. | 0.84 | 0.75 | 0.93 | — | — | |
| Dell Technologies Inc. | 0.17 | 0.17 | 0.26 | — | — | |
| Lumentum Holdings Inc. | 3.18 | 3.56 | 2.93 | — | — | |
| Super Micro Computer Inc. | 0.32 | 0.18 | 0.24 | — | — | |
| Cash Ratio, Sector | ||||||
| Technology Hardware & Equipment | 0.45 | 0.35 | 0.51 | — | — | |
| Cash Ratio, Industry | ||||||
| Information Technology | 0.71 | 0.67 | 0.89 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 1,705 ÷ 5,736 = 0.30
2 Click competitor name to see calculations.
The cash ratio for the period between December 31, 2019, and December 31, 2023, exhibits a non-linear trend, characterized by a period of strengthening followed by a return to baseline levels. While the ratio peaked in 2021, the overall trajectory reflects a growing disparity between the accumulation of liquid assets and the expansion of short-term obligations.
- Total Cash Assets Performance
- Liquid assets experienced significant fluctuation, rising from 1,001 million US$ in 2019 to a peak of 1,874 million US$ in 2021. After a contraction to 1,325 million US$ in 2022, assets recovered to 1,705 million US$ by the end of 2023. This represents a net increase in cash holdings of approximately 70% over the five-year observation period.
- Current Liabilities Trajectory
- A consistent and accelerating upward trend is observed in current liabilities. From 3,439 million US$ in 2019, short-term obligations rose steadily each year, reaching 5,736 million US$ by December 31, 2023. The sustained growth in liabilities indicates a significant expansion of the company's short-term financial commitments.
- Cash Ratio Analysis
- The cash ratio improved from 0.29 in 2019 to a high of 0.46 in 2021, indicating an enhanced ability to cover immediate liabilities with cash on hand. However, a sharp decline occurred in 2022, returning the ratio to 0.29. By December 31, 2023, the ratio stabilized at 0.30; although cash assets increased from the previous year, the simultaneous rise in current liabilities neutralized these gains, leaving the immediate liquidity position nearly identical to 2019 levels.
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