Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
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- Income Statement
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Analysis of Revenues
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Liquidity Ratios (Summary)
Motorola Solutions Inc., liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Current ratio | ||||||
| Quick ratio | ||||||
| Cash ratio |
Based on: 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), 10-K (reporting date: 2019-12-31).
- Current ratio
- The current ratio initially showed a modest upward trend from 1.21 in 2019 to 1.33 in 2021, indicating improving short-term liquidity over these years. However, from 2021 onward, the ratio decreased, falling to 1.15 in 2022 and further down to 1.00 in 2023. This decline suggests a reduced ability to cover current liabilities with current assets, signaling a weakening liquidity position towards the end of the observed period.
- Quick ratio
- Similar to the current ratio, the quick ratio exhibited a gradual increase from 1.01 in 2019 to 1.07 in 2021, reflecting enhanced liquidity with a focus on more liquid assets excluding inventories. However, a marked decline occurred afterwards, dropping to 0.84 in 2022 and slightly further to 0.79 in 2023. This downward trend points to a diminished capacity to meet short-term obligations without relying on inventory liquidation, which could raise concerns about operational liquidity.
- Cash ratio
- The cash ratio showed a positive upward movement from 0.29 in 2019 to 0.46 in 2021, indicating an improved position in terms of the company's most liquid assets. This was followed by a significant decrease to 0.29 in 2022, remaining relatively stable into 2023 at 0.30. The reduction after 2021 suggests a contraction in readily available cash and cash equivalents, which may impact the company's ability to quickly settle immediate liabilities.
Current Ratio
Motorola Solutions Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Current ratio1 | ||||||
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Apple Inc. | ||||||
| Arista Networks Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer Inc. | ||||||
| Current Ratio, Sector | ||||||
| Technology Hardware & Equipment | ||||||
| Current Ratio, Industry | ||||||
| Information Technology | ||||||
Based on: 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), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- The current assets exhibit a generally upward trend over the five-year period. Beginning at 4,178 million USD at the end of 2019, these assets increased steadily to reach 5,725 million USD by the end of 2023. Notable growth occurred particularly between 2020 and 2021, followed by a slight decline in 2022 before increasing again in 2023.
- Current Liabilities
- Current liabilities also show a consistent upward trajectory, rising from 3,439 million USD in 2019 to 5,736 million USD in 2023. The increase accelerated in the latter years, especially from 2022 to 2023, indicating a significant rise in short-term obligations during this period.
- Current Ratio
- The current ratio, representing the company's short-term liquidity, reflects a diminishing trend over the analyzed timeframe. Starting above 1.2 in 2019 and 2020, the ratio peaked at 1.33 in 2021 but declined thereafter, dropping to 1.15 in 2022 and reaching parity (1.0) by the end of 2023. This progression suggests a progressively tighter liquidity position, indicating that current assets are becoming less sufficient relative to current liabilities as time progresses.
- Overall Insights
- The combination of increasing current liabilities outpacing current assets growth, particularly in the last two years, leads to a lower current ratio and implies a tightening liquidity profile. While current assets have grown over the years, the increasing short-term obligations may pose additional pressure on the company's ability to meet its short-term commitments without relying on asset liquidation or additional financing.
Quick Ratio
Motorola Solutions Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | ||||||
| Accounts receivable, net | ||||||
| Contract assets | ||||||
| Total quick assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Quick ratio1 | ||||||
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Apple Inc. | ||||||
| Arista Networks Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer Inc. | ||||||
| Quick Ratio, Sector | ||||||
| Technology Hardware & Equipment | ||||||
| Quick Ratio, Industry | ||||||
| Information Technology | ||||||
Based on: 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), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets showed a fluctuating trend over the five-year period. From 2019 to 2021, there was a steady increase from 3,459 million USD to 4,365 million USD, indicating a strengthening liquidity position during these years. However, in 2022, total quick assets decreased to 3,817 million USD, showing a contraction compared to the previous year. In 2023, the quick assets rose again to 4,517 million USD, the highest value in the period, suggesting improved liquidity at the end of the period.
- Current liabilities
- Current liabilities exhibited a consistent upward trend throughout the period. Beginning at 3,439 million USD in 2019, liabilities rose modestly to 3,489 million USD in 2020 and increased further to 4,063 million USD in 2021. This rising trend accelerated in the subsequent years, reaching 4,560 million USD in 2022 and 5,736 million USD in 2023. The continuous increase indicates growing short-term obligations.
- Quick ratio
- The quick ratio initially showed a slight improvement, moving from 1.01 in 2019 to 1.07 in 2021, reflecting an improvement in the company's ability to cover its current liabilities with the most liquid assets. However, there was a marked decline in 2022 and 2023, with the ratio dropping to 0.84 and 0.79 respectively. This decrease below 1.0 in the last two years suggests a potential liquidity risk, as the quick assets no longer fully cover current liabilities.
- Summary
- Overall, while total quick assets increased over the five-year span, the pace of increase in current liabilities outstripped that of quick assets in the last two years, causing a deterioration in the quick ratio. The initial trend showed strengthening liquidity, but the latter part of the period reveals growing short-term obligations and reduced immediate liquidity coverage, which may warrant attention for liquidity management strategies.
Cash Ratio
Motorola Solutions Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 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 | ||||||
| Apple Inc. | ||||||
| Arista Networks Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer Inc. | ||||||
| Cash Ratio, Sector | ||||||
| Technology Hardware & Equipment | ||||||
| Cash Ratio, Industry | ||||||
| Information Technology | ||||||
Based on: 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), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals specific trends regarding the company's liquidity and short-term obligations over the five-year period ending in 2023.
- Total cash assets
- The total cash assets demonstrate an overall increasing trend from 2019 through 2023, rising from 1001 million US dollars in 2019 to 1705 million US dollars in 2023. The peak cash assets were noted in 2021 at 1874 million US dollars, followed by a notable decline in 2022 to 1325 million US dollars before recovering again in 2023.
- Current liabilities
- Current liabilities show a consistent upward trajectory throughout the period, increasing from 3439 million US dollars in 2019 to 5736 million US dollars in 2023. The growth in current liabilities is steady year-over-year, with no decreases recorded.
- Cash ratio
- The cash ratio, which measures the ability to cover current liabilities with cash assets, has fluctuated mildly. It increased from 0.29 in 2019 to a high of 0.46 in 2021, indicating improved liquidity in that year. However, it dropped again to 0.29 in 2022 and slightly increased to 0.30 in 2023. This suggests that despite higher cash assets in 2023 compared to 2019, the growth in current liabilities has outpaced cash increases, constraining liquidity when evaluated by this ratio.
In summary, while cash assets have grown in absolute terms, the company's current liabilities have increased at a faster pace, leading to a relative decline in liquidity as measured by the cash ratio since the 2021 peak. This indicates a potential tightening in short-term financial flexibility despite larger cash holdings.