Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
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- Income Statement
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Income Statement
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Analysis of Revenues
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Liquidity Ratios (Summary)
Northrop Grumman Corp., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 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).
The analysis of the liquidity ratios over the observed quarterly periods reveals notable fluctuations and trends in the company's short-term financial health.
- Current Ratio
- The current ratio generally trended upwards from the first quarter of 2019 through the end of 2020, increasing from 1.18 to a peak of 1.60 by December 2020. This suggests improving ability to cover short-term liabilities with current assets during this time frame. However, starting in 2021, the ratio exhibited a gradual decline, reaching a low of 1.08 by the end of 2022, indicating a weakening liquidity position. A slight recovery is observed by Q1 2023, with the ratio rising to 1.22.
- Quick Ratio
- The quick ratio followed a somewhat similar pattern to the current ratio but with less pronounced volatility. It rose steadily from 0.99 in early 2019 to a peak of 1.31 in mid-2021, reflecting an enhancement in the company's ability to meet quick liabilities without relying on inventory. Post mid-2021, the quick ratio declined, hitting 0.87 at the end of 2022, the lowest point in the observed period, before recovering to 1.03 in the first quarter of 2023. This decline may reflect either an increase in current liabilities or a decrease in liquid assets.
- Cash Ratio
- The cash ratio showed a significant upward trend starting from a very low base of 0.09 in Q1 2019, reaching a high of 0.51 by the end of 2020. This indicates an increasing level of cash and cash equivalents relative to current liabilities during this period. After peaking, the ratio experienced a steady decline throughout 2021 and 2022, with the lowest values recorded at 0.13 and 0.15 during mid and late 2022 respectively, before slightly improving to 0.24 in early 2023. This pattern suggests fluctuations in cash liquidity, with a dip potentially pointing to increased cash usage or reduced cash holdings in the later periods.
In summary, the liquidity ratios demonstrate a phase of strengthening liquidity through late 2020, followed by a declining trend during 2021 and 2022 across all three key measures. Early 2023 shows initial signs of recovery, suggesting some improvement in short-term financial stability. Monitoring these ratios will be important to assess ongoing liquidity management and operational efficiency.
Current Ratio
Northrop Grumman Corp., current ratio calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | 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 | |||||||
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| 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-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 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).
1 Q1 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals notable trends in the liquidity position as reflected by current assets, current liabilities, and the current ratio over the observed periods.
- Current Assets
- Current assets exhibited a general upward trajectory from March 2019 through December 2020, increasing from approximately $10.4 billion to $15.3 billion. This was followed by a period of decline and relative stabilization between December 2020 and December 2021, with values fluctuating around $12.4 billion to $13 billion. In 2022, current assets decreased initially but then recovered modestly by March 2023, ending at about $12.8 billion.
- Current Liabilities
- Current liabilities showed some variability but overall a less pronounced upward trend than current assets. From March 2019 to March 2020, liabilities increased from around $8.8 billion to slightly over $10 billion, fluctuating in subsequent quarters. There was a notable increase during the second half of 2022 to the end of 2022, with a peak of approximately $11.6 billion at December 2022. By March 2023, current liabilities decreased somewhat to about $10.5 billion.
- Current Ratio
- The current ratio, an indicator of short-term liquidity, varied between 1.08 and 1.60 during the analyzed period. It broadly mirrored movements in current assets and liabilities. The highest ratio was recorded at the end of 2020 (1.60), suggesting strong liquidity at that time. Subsequently, a decline occurred through 2022, reaching a low of 1.08 in December 2022, implying reduced short-term liquidity. A slight improvement was noted by March 2023, with the ratio increasing to 1.22.
In summary, the liquidity position improved significantly up to the end of 2020, driven mainly by rising current assets and relatively moderate liability growth. However, from 2021 onward, the current ratio decreased due to a combination of declining current assets and increasing liabilities, particularly noticeable in late 2022. The recent data suggests a modest recovery in liquidity by early 2023, albeit still below the peaks observed in 2020.
Quick Ratio
Northrop Grumman Corp., quick ratio calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||
| Accounts receivable, net | |||||||||||||||||||||||
| Unbilled receivables, net | |||||||||||||||||||||||
| 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-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 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).
1 Q1 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the company's liquidity position over the observed periods.
- Total Quick Assets
- This metric shows a general upward trend from early 2019 through to late 2020, increasing from approximately 8.7 billion US dollars to around 12.7 billion US dollars. Following this peak, there is a noticeable decline starting in early 2021, where quick assets decrease to around 10 billion US dollars by early 2023, with some minor fluctuations observed within this period.
- Current Liabilities
- Current liabilities demonstrate variability throughout the period. Beginning at roughly 8.8 billion US dollars in early 2019, liabilities peak near 10.2 billion US dollars around the first half of 2020. A decline follows until early 2021, reaching approximately 8.4 billion US dollars. From there, liabilities trend upward again, rising to a peak of about 11.6 billion US dollars by the end of 2022 before slightly decreasing to approximately 10.5 billion US dollars in the first quarter of 2023.
- Quick Ratio
- The quick ratio fluctuates over the examined quarters, with values generally exceeding 1.0 from mid-2019 through 2021, peaking around 1.31 during mid-2021. This indicates periods in which liquid assets notably exceeded current liabilities, reflecting stronger short-term liquidity. However, beginning in late 2021 and continuing through late 2022, the ratio declines, falling below 1.0, reaching a low near 0.87 by the fourth quarter of 2022. By the first quarter of 2023, the quick ratio recovers slightly to just above 1.0.
Overall, the data suggests that liquidity strengthened significantly through 2020 and mid-2021, as evidenced by increasing quick assets and a strong quick ratio. However, liquidity conditions tightened from late 2021 through late 2022, with quick assets declining and current liabilities rising, leading to a dip in the quick ratio below 1.0. The slight rebound in early 2023 might indicate initial improvements in the short-term financial position.
Cash Ratio
Northrop Grumman Corp., cash ratio calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Cash and cash 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-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 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).
1 Q1 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals notable trends in the company's liquidity position over the observed periods.
- Total Cash Assets
- Total cash assets exhibited a general upward trajectory starting from 755 million USD in the first quarter of 2019, reaching a peak of 4,995 million USD by the third quarter of 2020. Following this peak, cash reserves demonstrated significant fluctuations, with a decline to 3,517 million USD by the first quarter of 2021 and further decreases to a low of 1,169 million USD by the second quarter of 2022. Subsequently, there was a partial recovery, with cash assets increasing to 2,577 million USD by the fourth quarter of 2022 and stabilizing around 2,495 million USD in the first quarter of 2023.
- Current Liabilities
- Current liabilities fluctuated within a relatively consistent range throughout the periods under review. Starting at 8,821 million USD in the first quarter of 2019, liabilities saw moderate decreases and increases but generally hovered between approximately 8,150 million USD and 11,587 million USD. Notable peaks occurred in the fourth quarter of 2022 and the third quarter of 2022, reaching 11,587 million USD and 10,812 million USD respectively, indicating periods of increased short-term financial obligations.
- Cash Ratio
- The cash ratio, reflecting the company's ability to cover current liabilities with cash and cash equivalents, improved steadily from 0.09 in early 2019 to a high of 0.51 in the fourth quarter of 2020. This upward trend signals enhanced liquidity during this period. However, after this peak, the ratio declined notably, falling to 0.13 by mid-2022, indicating a reduced capacity to meet short-term liabilities purely with cash. A modest recovery followed, with the ratio reaching 0.24 again by the first quarter of 2023.
In summary, the data illustrate an initial strengthening of liquidity and cash reserves up to late 2020, followed by a period of diminished cash holdings and corresponding liquidity ratios coinciding with elevated current liabilities in late 2022. The partial rebound in cash assets and cash ratio in early 2023 suggests some restoration of liquidity, yet the ratio remains below the 2020 peak, indicating ongoing attention to short-term financial health may be warranted.