Raytheon Co. (NYSE:RTN)

Current Ratio Trend

The current ratio exhibited fluctuations over the periods analyzed. Starting at 1.82 in March 2015, it declined to a trough of 1.34 by the end of December 2019, indicating a decrease in the company's short-term liquidity coverage. However, within this timeframe, there were intervals of relative stability, particularly between mid-2016 and mid-2017, where the ratio hovered around 1.66 to 1.69. The declining trend towards the end of the period suggests a potential tightening in the company's ability to meet short-term obligations.

Quick Ratio Pattern

The quick ratio followed a generally similar pattern to the current ratio but remained consistently lower, as expected due to the exclusion of inventory from current assets. It began at 1.66 in March 2015 and decreased to 1.20 by December 2019. The ratio showed minor recoveries during mid-2016 and early 2017 but overall depicted a downward trajectory. This trend may imply a reduction in liquid assets relative to current liabilities, potentially signaling increased liquidity risk.

Cash Ratio Movement

The cash ratio demonstrated more pronounced variability and was markedly lower than both the current and quick ratios throughout the observed periods. Starting at 0.73 in March 2015, it saw a sharp decline through 2015 and 2016, hitting lows near 0.29 by late 2018 and early 2019. A partial recovery occurred in mid to late 2019, with the ratio rising back to 0.44 by December 2019. This indicates that while cash and cash equivalents relative to current liabilities declined significantly, there was some improvement towards the end of the period. The relatively low and volatile cash ratio suggests a limited cushion of immediate liquidity at various points during the timeframe examined.

Overall Liquidity Analysis

Across all three liquidity measures, the general trend indicates a decline in short-term liquidity from 2015 through 2019, with some temporary periods of stabilization or slight recovery. The decreasing current and quick ratios point to a reduction in the company's ability to cover current liabilities with its current and liquid assets. The cash ratio’s fluctuation and overall low levels underline variability in the most liquid assets available. The observed patterns may warrant further investigation into working capital management and cash flow strategies during the period analyzed.

Over the examined quarterly periods, current assets displayed fluctuations with an overall upward trend towards the end of the period. Starting at 10,241 million USD in March 2015, the value experienced some declines and increases but showed a general increase, peaking at 13,082 million USD in December 2018 before settling slightly lower but still elevated compared to initial values, with 13,082 million USD recorded by the final quarter of 2019.

Current liabilities showed a more volatile trajectory with periods of both increases and stability, yet with a marked rise in the latter part of the series. The figure began at 5,635 million USD in the first quarter of 2015 and hovered around the 6,000 to 7,000 million USD range for many quarters. However, by the end of 2019, current liabilities had escalated sharply to 9,791 million USD, indicating increasing short-term obligations.

The current ratio, which measures liquidity by comparing current assets to current liabilities, showed a decline throughout the period. Initially high at 1.82 in the first quarter of 2015, the ratio generally trended downward with some minor recoveries, ending at 1.34 in December 2019. This declining current ratio suggests a reduction in the company’s short-term liquidity and capacity to cover its current liabilities with its current assets over the observed time frame.

Current Assets

Fluctuated within the range of approximately 8,700 to 13,100 million USD, showing an overall increasing pattern toward the end of the period.

Current Liabilities

Displayed increased volatility and a marked upward trend, particularly notable in the last year, ending near 9,800 million USD.

Current Ratio

Decreased steadily from a strong liquidity position at above 1.8 to a lower level near 1.3, indicating diminishing short-term financial stability.

The analysis of the quarterly financial data reveals notable trends in liquidity as measured by total quick assets, current liabilities, and the quick ratio over the observed periods.

Total Quick Assets

The total quick assets displayed fluctuations with an overall upward trend from the beginning to the end of the timeframe. Starting at 9,363 million USD, quick assets decreased to a low point of 8,008 million in the second quarter of 2015 but generally increased thereafter. The highest values were recorded in the final quarters, peaking at 11,778 million USD in the last quarter of 2019, indicating an improvement in liquid asset reserves over time.

Current Liabilities

Current liabilities showed a gradual increase over the periods with some variability. Initial liabilities were 5,635 million USD, which generally rose to reach 9,791 million USD by the last quarter of 2019. This increasing trend suggests a growing short-term obligation, which may exert pressure on liquidity management if not matched with proportional asset growth.

Quick Ratio

The quick ratio, representing the company's ability to cover current liabilities with its most liquid assets, exhibited a declining trend over the analyzed periods. Starting at 1.66 in the first quarter of 2015, it experienced fluctuations but consistently trended downward to 1.20 by the end of 2019. This decrease highlights a weakening coverage position despite the rising quick assets, primarily due to proportionally higher growth in current liabilities.

Overall, while the company’s liquid assets expanded, the rate of increase in current liabilities outpaced this growth, resulting in a reduced quick ratio. This indicates a potential decline in short-term liquidity strength and suggests a need for cautious monitoring of liquidity risk going forward.

The analysis of the quarterly financial data reveals several notable trends and fluctuations in the company's liquidity position over the examined periods.

Total Cash Assets

The total cash assets demonstrate volatility throughout the periods. Initially, cash assets start at a high of 4,140 million USD in March 2015, followed by a significant decline to 2,494 million USD by June 2015. Subsequent quarters show moderate recovery with intermittent decreases, such as between April 2017 (2,585 million USD) and October 2017 (2,311 million USD), as well as a sharp reduction to 2,073 million USD in September 2018. However, some quarters exhibit marked increases, notably December 2018 (3,608 million USD) and December 2019 (4,292 million USD), suggesting periods of enhanced liquidity reserves towards the end of certain years.

Current Liabilities

Current liabilities generally exhibit an upward trend across the timeframe. Beginning at 5,635 million USD in March 2015, liabilities fluctuate moderately within each year but show a consistent increase towards the later years, culminating at 9,791 million USD in December 2019. This steady rise indicates increased short-term obligations and potential pressures on liquidity management.

Cash Ratio

The cash ratio, indicating the proportion of cash assets relative to current liabilities, consistently remains below 1.0, reflecting that cash assets are insufficient to cover short-term liabilities in full during the entire period. Initially, the ratio is 0.73 in March 2015, dropping sharply to 0.44 by June 2015 and generally trending downward or stabilizing at lower values thereafter. The ratio reaches its nadir at 0.27 in March 2019, signaling the lowest level of liquidity relative to immediate obligations. There are moderate recoveries at times, such as the increase to 0.44 in December 2019, but overall the trend suggests constrained liquidity relative to the growing current liabilities.

In summary, the company experiences fluctuating cash reserves alongside steadily increasing current liabilities, leading to a generally declining cash liquidity ratio. This pattern highlights potential challenges in short-term liquidity management, where cash assets are not proportionally growing with liabilities, raising considerations for financial strategy to ensure sufficient liquidity coverage going forward.