Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
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Liquidity Ratios (Summary)
Parker-Hannifin Corp., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30).
The analysis of liquidity ratios over time reveals several notable trends and fluctuations. The Current ratio generally exhibits moderate variability with values mostly ranging between 1.28 and 2.43. A significant peak is noticeable in the second quarter of 2019, reaching 2.43, followed by a decline to lower values around 1.3 towards the end of 2022. This pattern suggests intermittent strengthening of short-term asset coverage against liabilities, but with some periods of contraction.
The Quick ratio, which excludes inventories from current assets, demonstrates more pronounced volatility. Initially hovering near the 1.0 mark, it experiences a sharp increase in the second quarter of 2019 to 1.84, indicating enhanced immediate liquidity. However, subsequent quarters show a downward trajectory, with values falling as low as 0.54 in the first quarter of 2022, before a slight recovery to around 0.65 by the end of 2022. This decline indicates reduced ability to cover current liabilities without relying on inventory sales over recent periods.
Regarding the Cash ratio, which measures the most liquid assets relative to current liabilities, the data shows a similar pattern of fluctuation. There is a significant surge in the second quarter of 2019 to 1.07, suggesting a strong cash position at that point. Following this, the ratio declines to single-digit levels below 0.3 for most subsequent quarters, reaching its lowest around 0.09 in mid-2022 before a minor increase to 0.14 at the end of 2022. This decline points to a substantial reduction in the company's immediate cash availability relative to its short-term obligations.
- Current Ratio
- Shows moderate variation across periods, with a prominent peak in mid-2019 and a gradual decrease thereafter.
- Quick Ratio
- Experiences higher volatility, with a temporary boost in mid-2019 followed by a steady downturn into early 2022, indicating weakening liquid asset coverage excluding inventories.
- Cash Ratio
- Mirrors the quick ratio's trend, with a notable spike in mid-2019 and a significant decline through 2022, reflecting diminished immediate cash resources.
In summary, the liquidity profile indicates a period of relative strength in mid-2019, possibly related to operational or financial strategy changes increasing liquid assets. Since then, all three ratios consistently trend downward, signaling decreasing short-term liquidity and tighter cash positions. The divergence between the current and quick ratios suggests increasing reliance on inventories to maintain liquidity, while the continuously low cash ratio underscores limited cash reserves to meet immediate liabilities. These trends may warrant closer financial management attention to ensure ongoing liquidity adequacy.
Current Ratio
Parker-Hannifin Corp., current ratio calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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. | |||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30).
1 Q2 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The company's current assets demonstrated an overall upward trend over the period analyzed, with fluctuations evident in certain quarters. Initial values in late 2017 were around $5.0 billion, increasing significantly to surpass $8.1 billion in mid-2019 and reaching peak levels above $12.0 billion by mid-2022. There were intermittent declines, such as a reduction observed in late 2019 and mid-2020, followed by recovery phases thereafter.
Current liabilities also exhibited variability but generally trended upward, moving from approximately $3.5 billion in late 2017 to over $5.7 billion by the end of 2022. Noteworthy spikes in current liabilities appeared in mid to late 2021 and 2022, notably rising sharply from around $3.2 billion in mid-2021 to peak values exceeding $5.8 billion in mid-2022, indicating increased short-term obligations during this interval.
The current ratio fluctuated between 1.28 and 2.43 throughout the periods, reflecting variable short-term liquidity conditions. It peaked in mid-2019 at 2.43, suggesting strong liquidity with current assets more than double current liabilities. However, the current ratio experienced a decline thereafter, dropping to levels near 1.3 by the end of 2022, the lowest in the timeframe, implying reduced liquidity strength in the latest quarters. Periodic recoveries in the ratio were observed, with values temporarily rising to around 1.8 in mid-2021, before descending again.
Overall, while the company maintained current assets growth over the years, current liabilities also increased substantially in recent quarters, exerting downward pressure on liquidity ratios. The declining current ratio towards the end of the analyzed period suggests tighter working capital management or increased short-term debt, highlighting a potential area for closer financial monitoring.
- Current Assets
- Showed growth from approximately $5 billion in late 2017 to peaks over $12 billion by mid-2022, with some intermittent declines.
- Current Liabilities
- Increased overall from around $3.5 billion to nearly $5.8 billion by the end of 2022, with significant rises in late 2021 and into 2022.
- Current Ratio
- Varied between 1.28 and 2.43, peaking mid-2019, then trending downward, indicating diminishing short-term liquidity toward the end of the period.
Quick Ratio
Parker-Hannifin Corp., quick ratio calculation (quarterly data)
| Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||||||||
| Marketable securities and other investments | |||||||||||||||||||||||||||||
| Trade accounts receivable, net | |||||||||||||||||||||||||||||
| Non-trade and notes receivable | |||||||||||||||||||||||||||||
| 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: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30).
1 Q2 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data highlights several trends in liquidity and short-term financial stability over the period examined. The total quick assets and current liabilities fluctuated notably, impacting the quick ratio, a key measure of the company’s ability to meet short-term obligations without relying on inventory sales.
- Total Quick Assets
- Total quick assets displayed variability throughout the periods, with an initial moderate level around 3.16 billion US dollars at the end of September 2017, increasing steadily and peaking significantly at approximately 6.18 billion US dollars by September 2019. Post this peak, quick assets experienced a marked decline, reaching a low near 2.74 billion US dollars by December 2020. Subsequently, the amount showed a recovery trend, with fluctuations but generally maintaining levels between 2.9 billion and 3.7 billion US dollars towards the end of 2022.
- Current Liabilities
- Current liabilities followed an inconsistent pattern, ranging broadly between approximately 3.15 billion and 5.86 billion US dollars. The period from September 2017 to June 2019 remained relatively stable, fluctuating around 3.15 to 4.15 billion US dollars. In contrast, significant spikes occurred from December 2021 onwards, with liabilities rising sharply to a high of 5.86 billion US dollars by June 2022, suggesting increased short-term financial obligations during this latter period.
- Quick Ratio
- The quick ratio illustrated changes consistent with the movements in quick assets and current liabilities. Initially near parity with values close to 1.0 in early periods, a notable peak was observed at 1.84 by mid-2019, reflecting strong liquidity and a buffer above current liabilities. However, this was followed by a decline to below 0.90 by the year's end and into 2020, indicating reduced liquidity. The ratio further deteriorated sharply from late 2021, reaching lows around 0.54 to 0.65 through 2022, indicating weakening short-term financial health and potential liquidity risk.
Overall, the data reveals a phase of robust liquidity up to mid-2019, followed by a softening and heightened volatility in quick assets and liabilities. The latter part of the dataset suggests increasing pressure on the company’s liquidity position, with current liabilities rising disproportionately to quick assets, reflected in a declining quick ratio. This trend signals a need for close monitoring and potential strategic adjustments to manage short-term financial obligations effectively.
Cash Ratio
Parker-Hannifin Corp., cash ratio calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||||||||
| Marketable securities and other 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. | |||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30).
1 Q2 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The quarterly financial data reveals distinct trends in liquidity and working capital management over the observed periods.
- Total Cash Assets
- Total cash assets exhibit considerable fluctuations. After some moderate variation from late 2017 through early 2019, there is a significant spike in mid-2019, with cash assets rising sharply to over 3 billion USD, followed by a peak nearing 3.9 billion USD by late 2019. Post this peak, cash reserves decline notably during 2020, stabilizing at lower levels for the subsequent quarters, mostly remaining between roughly 480 million and 770 million USD through 2021 and 2022. This pattern suggests a period of heightened liquidity in 2019, possibly reflecting cash inflows or financing activities, with later quarters showing a more restrained cash position.
- Current Liabilities
- Current liabilities display an overall upward trend across the dataset, albeit with significant variability. Initially stable around the 3.1 to 3.5 billion USD range through 2018 and the first half of 2019, liabilities jumped sharply by late 2019 and continued to escalate dramatically during 2021 and 2022, reaching peaks above 5.8 billion USD. This substantial increase in current liabilities toward the end of the timeline indicates increasing short-term obligations which may impact working capital management and liquidity pressures if not matched by asset growth.
- Cash Ratio
- The cash ratio mirrors the fluctuations seen in cash assets and current liabilities, indicating changing liquidity risk and short-term financial health. Between 2017 and early 2019, ratios ranged between 0.27 and 0.34, signifying moderate coverage of current liabilities by cash assets. A pronounced spike is noted in mid-2019, when the cash ratio exceeds 1.0, reflecting strong liquidity possibly coinciding with the surge in cash assets. However, following this peak, the cash ratio sharply declines through 2020 and remains at lower levels around 0.09 to 0.25 for the remainder of the periods, indicating reduced immediate liquidity to cover current liabilities.
In summary, the data portrays a period of significant liquidity accumulation in mid-2019, followed by a decline in cash reserves despite rising current liabilities in subsequent periods. The resulting decline in the cash ratio indicates tightening liquidity conditions, potentially necessitating closer management of cash flows and short-term financial obligations.