Raytheon Co. (NYSE:RTN)

Current Ratio

The current ratio experienced slight fluctuations over the examined periods. Initially, it remained relatively stable, ranging between 1.63 and 1.69 during 2016. In 2017, the ratio maintained a similar level but showed a gradual decrease toward the end of the year, reaching 1.54 by December 2017. The downward trend continued through 2018 and into 2019, with the current ratio declining from 1.62 in April 2018 to 1.34 by the end of 2019. This indicates a moderate decrease in short-term liquidity over the time frame, suggesting a reduction in current assets relative to current liabilities.

Quick Ratio

The quick ratio closely followed the trends observed in the current ratio, starting at 1.48 in early 2016 and gradually increasing to a peak of 1.55 in October 2016. It then slightly decreased through 2017, ending at 1.36 in December 2017. During 2018 and 2019, the quick ratio demonstrated a declining trend, dropping from 1.45 in April 2018 to 1.20 at the end of 2019. This decrease highlights a diminishing ability to cover short-term liabilities with the most liquid assets, excluding inventory, signaling a potential tightening of liquidity.

Cash Ratio

The cash ratio showed more pronounced variability compared to the other liquidity ratios. During 2016, it remained within a narrow band between 0.45 and 0.53, peaking at 0.53 in December 2016. In 2017, the ratio decreased, reaching a low of 0.36 in October before recovering slightly to 0.46 by December. The ratio then declined sharply in 2018, with fluctuations ranging from 0.29 to 0.44, indicating variability in cash and cash equivalents relative to current liabilities. The first three quarters of 2019 saw the cash ratio hover around the mid-0.20s to mid-0.30s, before recovering to 0.44 by the end of the year. This pattern suggests intermittent changes in cash reserves, reflecting possible shifts in cash management or operating cash flows.

Current Assets

Current assets exhibited a generally upward trend over the analyzed quarters, increasing from 9,359 million USD in April 2016 to 13,082 million USD by December 2019. Minor fluctuations are observed, such as a slight dip from 11,315 million USD in July 2018 to 10,635 million USD in September 2018, which was followed by a recovery in subsequent quarters. The overall pattern reflects steady growth with occasional short-term volatility.

Current Liabilities

Current liabilities also rose over the period, starting at 5,749 million USD in April 2016 and reaching 9,791 million USD in December 2019. The increases were relatively consistent, with more pronounced jumps seen in the latter part of the period, particularly between September 2018 and December 2019. This indicates growing short-term obligations that outpaced the growth rate of current assets in the last quarters.

Current Ratio

The current ratio demonstrated a declining trend from 1.63 in April 2016 to 1.34 in December 2019, suggesting a gradual erosion of liquidity. While the ratio fluctuated moderately, it remained mostly above 1.4 until mid-2019. The decrease implies that current liabilities grew at a faster pace relative to current assets, potentially indicating tighter short-term financial flexibility and increasing pressure on the company's ability to cover short-term obligations.

The analysis of the quarterly financial data reveals several notable trends regarding liquidity and short-term financial management.

Total Quick Assets

Total quick assets generally show an upward trajectory over the observed period. Starting at 8,527 million USD in April 2016, there is a steady increase with some fluctuations, reaching 11,778 million USD by December 2019. This indicates an overall strengthening in liquid resources available to the company to meet immediate obligations.

Current Liabilities

Current liabilities also exhibit an increasing trend, rising from 5,749 million USD in April 2016 to 9,791 million USD in December 2019. The increase is consistent, with notable spikes in certain quarters such as December 2017 and December 2018. This growth in liabilities suggests heightened short-term obligations that the company must address.

Quick Ratio

The quick ratio fluctuates over the periods analyzed, starting at 1.48 in April 2016 and experiencing a gradual decline towards the end of the period. It declined from a peak around 1.55 in October 2016 to values consistently near or below 1.3 in 2018 and 2019, finishing at 1.2 in December 2019. This downward trend in the quick ratio indicates that the company's liquidity buffer relative to current liabilities has been diminishing, reflecting potentially tighter short-term financial conditions.

In summary, while the company has increased its total quick assets, current liabilities have grown at a comparable or faster pace. The reduction in the quick ratio over time suggests a decreasing cushion of liquid assets relative to liabilities, which could imply increased risk in meeting short-term obligations if the trend continues. Continuous monitoring of this ratio is advisable to ensure liquidity remains adequate.

Total Cash Assets

The total cash assets exhibit a fluctuating pattern throughout the periods analyzed. Starting at US$2,645 million in April 2016, there is a gradual increase toward the end of 2016, peaking at US$3,403 million in December 2016. However, in 2017, cash assets generally decline, reaching a low of US$2,311 million in October 2017 before rebounding again to US$3,400 million by December 2017. In 2018, the cash assets again show volatility, declining to US$2,073 million by September before recovering to US$3,608 million at the year-end. The first three quarters of 2019 indicate a downward trend followed by a notable sharp increase to US$4,292 million at the end of December 2019, signaling improved liquidity or cash accumulation late in the year.

Current Liabilities

Current liabilities show a consistent upward trend over the entire periods under review. Beginning at US$5,749 million in April 2016, these liabilities steadily increase each quarter, reaching US$9,791 million by December 2019. The increase appears relatively steady without significant reversals, implying growing short-term obligations or liabilities during this timeframe.

Cash Ratio

The cash ratio, representing cash assets relative to current liabilities, fluctuates but generally trends downward over the periods. Initially, it is around 0.46 in early 2016 and reaches its highest quarterly point at 0.53 by December 2016. This increase suggests improved liquidity at year-end 2016. From 2017 onward, the ratio declines, dropping to a low of 0.27 in March 2019. There is a slight recovery toward the later part of 2019, reaching 0.44 by December 2019. This pattern indicates that cash availability relative to liabilities diminished over time, although some improvement was noted in the latter part of 2019.

Overall Observations

The data indicates that while cash assets experience notable volatility, current liabilities consistently increase, leading to a general decline in the cash ratio over the period. This suggests increasing short-term liabilities outpacing cash liquidity, which may pose challenges for short-term financial flexibility. The marked increase in cash assets at the end of 2019, coupled with a rising cash ratio, could reflect management efforts to strengthen liquidity after several quarters of decline.