Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
RTX Corp., liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Current ratio | 0.99 | 1.04 | 1.09 | 1.19 | 1.21 | |
| Quick ratio | 0.60 | 0.63 | 0.69 | 0.81 | 0.78 | |
| Cash ratio | 0.11 | 0.14 | 0.16 | 0.22 | 0.25 |
Based on: 10-K (reporting date: 2024-12-31), 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).
- Current Ratio
- The current ratio exhibited a gradual decline over the five-year period, decreasing from 1.21 in 2020 to 0.99 in 2024. This trend suggests a steady reduction in the company’s short-term liquidity, indicating that current assets relative to current liabilities have diminished over time. The ratio moving below 1.0 in 2024 signals potential challenges in covering short-term obligations using existing current assets.
- Quick Ratio
- The quick ratio also showed a declining trend, starting at 0.78 in 2020 and falling to 0.60 by 2024. This reduction indicates a decrease in the company's liquid assets excluding inventories available to meet short-term liabilities. The consistent decrease each year points toward a weakening in the company’s ability to quickly cover current liabilities without relying on inventory liquidation.
- Cash Ratio
- The cash ratio followed a similar downward trajectory, declining from 0.25 in 2020 to 0.11 in 2024. This substantial decrease reflects a significant reduction in the most liquid assets, namely cash and cash equivalents, relative to current liabilities. The decline in cash ratio is more pronounced compared to the other liquidity measures, highlighting increasingly constrained immediate liquidity over the observed period.
Current Ratio
RTX Corp., current ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 51,133) | 48,417) | 42,443) | 42,050) | 43,376) | |
| Current liabilities | 51,499) | 46,761) | 39,114) | 35,449) | 35,848) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 0.99 | 1.04 | 1.09 | 1.19 | 1.21 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Boeing Co. | 1.32 | 1.14 | 1.22 | 1.33 | 1.39 | |
| Caterpillar Inc. | 1.42 | 1.35 | 1.39 | 1.46 | 1.53 | |
| Eaton Corp. plc | 1.50 | 1.51 | 1.38 | 1.04 | 1.56 | |
| GE Aerospace | 1.09 | 1.18 | 1.16 | 1.28 | 1.58 | |
| Honeywell International Inc. | 1.31 | 1.27 | 1.25 | 1.30 | 1.47 | |
| Lockheed Martin Corp. | 1.13 | 1.21 | 1.32 | 1.42 | 1.39 | |
| Current Ratio, Sector | ||||||
| Capital Goods | 1.23 | 1.18 | 1.22 | 1.31 | 1.43 | |
| Current Ratio, Industry | ||||||
| Industrials | 1.19 | 1.16 | 1.20 | 1.29 | 1.41 | |
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= 51,133 ÷ 51,499 = 0.99
2 Click competitor name to see calculations.
The analysis of the financial data for the given periods illustrates several notable trends concerning the company's liquidity and short-term financial position.
- Current Assets
- Current assets showed a gradual increase over the five-year period. Starting at US$43,376 million in 2020, there was a slight dip in 2021 to US$42,050 million followed by a modest recovery in 2022 to US$42,443 million. The upward trend continued more strongly in 2023 and 2024, reaching US$48,417 million and US$51,133 million respectively. This overall increase indicates an expanding base of assets readily convertible into cash within a year.
- Current Liabilities
- Current liabilities exhibited a consistent upward trajectory throughout the same period. From US$35,848 million in 2020, liabilities increased steadily each year, with a notable jump in 2023 to US$46,761 million and reaching US$51,499 million in 2024. This trend indicates a growing short-term obligation load, which could put pressure on liquidity.
- Current Ratio
- The current ratio, which measures the ability to cover current liabilities with current assets, showed a declining trend during the period under review. It started at a relatively comfortable ratio of 1.21 in 2020 and declined progressively to 0.99 by the end of 2024. This ratio falling below 1.00 suggests that the company’s current liabilities exceed its current assets by the final year, signaling potential liquidity concerns.
Overall, although current assets have increased over the five years, the more rapid increase in current liabilities has caused the current ratio to decline steadily. This suggests a tightening liquidity position and potentially heightened short-term financial risk. Monitoring and managing the balance between current assets and liabilities will be crucial for maintaining financial stability.
Quick Ratio
RTX Corp., quick ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 5,578) | 6,587) | 6,220) | 7,832) | 8,802) | |
| Accounts receivable, net | 10,976) | 10,838) | 9,108) | 9,661) | 9,254) | |
| Contract assets | 14,570) | 12,139) | 11,534) | 11,361) | 9,931) | |
| Total quick assets | 31,124) | 29,564) | 26,862) | 28,854) | 27,987) | |
| Current liabilities | 51,499) | 46,761) | 39,114) | 35,449) | 35,848) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 0.60 | 0.63 | 0.69 | 0.81 | 0.78 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Boeing Co. | 0.39 | 0.28 | 0.32 | 0.34 | 0.41 | |
| Caterpillar Inc. | 0.80 | 0.74 | 0.79 | 0.89 | 1.02 | |
| Eaton Corp. plc | 0.85 | 0.91 | 0.73 | 0.54 | 0.68 | |
| GE Aerospace | 0.78 | 0.78 | 0.81 | 0.93 | 1.27 | |
| Honeywell International Inc. | 0.88 | 0.84 | 0.88 | 0.94 | 1.15 | |
| Lockheed Martin Corp. | 0.92 | 0.99 | 1.09 | 1.15 | 1.05 | |
| Quick Ratio, Sector | ||||||
| Capital Goods | 0.62 | 0.60 | 0.64 | 0.71 | 0.83 | |
| Quick Ratio, Industry | ||||||
| Industrials | 0.69 | 0.66 | 0.72 | 0.80 | 0.87 | |
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 31,124 ÷ 51,499 = 0.60
2 Click competitor name to see calculations.
- Total Quick Assets
-
The total quick assets show some fluctuation over the five-year period. Starting at US$27,987 million at the end of 2020, there is a slight increase to US$28,854 million in 2021, followed by a decrease to US$26,862 million in 2022. Subsequently, total quick assets increase steadily to US$29,564 million in 2023 and reach US$31,124 million by the end of 2024. Overall, the trend indicates a moderate growth in liquid assets after a dip in 2022.
- Current Liabilities
-
Current liabilities continuously increase throughout the period. They start at US$35,848 million in 2020 and slightly decrease to US$35,449 million in 2021. From 2021 onward, there is a pronounced upward trend, rising to US$39,114 million in 2022, then sharply increasing to US$46,761 million in 2023, and reaching US$51,499 million in 2024. This consistent growth in obligations due within a year suggests increasing short-term financial commitments.
- Quick Ratio
-
The quick ratio demonstrates a clear declining trend across the five years. Starting at 0.78 at the end of 2020, it slightly improves to 0.81 in 2021 but then decreases significantly to 0.69 in 2022. The downward trajectory continues, with the ratio falling to 0.63 in 2023 and further to 0.60 in 2024. This decline reflects a deteriorating ability to cover current liabilities with the most liquid assets, indicating potential liquidity risk.
- Summary Insights
-
Although total quick assets demonstrate moderate growth after a drop in 2022, the sharp increase in current liabilities outpaces asset growth, leading to a steady decline in the quick ratio. This suggests that while liquid assets are increasing somewhat, they are not keeping pace with the expansion in short-term liabilities. This dynamic results in a decreased short-term liquidity position over the observed period, potentially increasing the company’s vulnerability to liquidity pressures.
Cash Ratio
RTX Corp., cash ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 5,578) | 6,587) | 6,220) | 7,832) | 8,802) | |
| Total cash assets | 5,578) | 6,587) | 6,220) | 7,832) | 8,802) | |
| Current liabilities | 51,499) | 46,761) | 39,114) | 35,449) | 35,848) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.11 | 0.14 | 0.16 | 0.22 | 0.25 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Boeing Co. | 0.27 | 0.17 | 0.19 | 0.20 | 0.29 | |
| Caterpillar Inc. | 0.21 | 0.20 | 0.22 | 0.31 | 0.36 | |
| Eaton Corp. plc | 0.26 | 0.34 | 0.09 | 0.08 | 0.19 | |
| GE Aerospace | 0.42 | 0.45 | 0.44 | 0.54 | 0.78 | |
| Honeywell International Inc. | 0.52 | 0.44 | 0.51 | 0.59 | 0.79 | |
| Lockheed Martin Corp. | 0.13 | 0.09 | 0.16 | 0.26 | 0.23 | |
| Cash Ratio, Sector | ||||||
| Capital Goods | 0.26 | 0.24 | 0.26 | 0.32 | 0.44 | |
| Cash Ratio, Industry | ||||||
| Industrials | 0.31 | 0.29 | 0.32 | 0.39 | 0.47 | |
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 5,578 ÷ 51,499 = 0.11
2 Click competitor name to see calculations.
- Total cash assets
- The total cash assets show a decreasing trend over the five-year period. Starting at 8,802 million US dollars in 2020, the amount declined steadily to 5,578 million by the end of 2024. The most significant drop occurred between 2021 and 2022. Although there was a slight recovery in 2023, the overall trend remains downward.
- Current liabilities
- Current liabilities have increased consistently from 35,848 million US dollars in 2020 to 51,499 million in 2024. The rise accelerated particularly from 2022 onward, suggesting growing short-term obligations for the company.
- Cash ratio
- The cash ratio, which measures the company’s immediate liquidity relative to current liabilities, declined from 0.25 in 2020 to 0.11 in 2024. This reduction reflects the combined effect of decreasing cash assets and rising current liabilities, indicating a weakening liquidity position over time.