Eaton Corp plc Fair Value Disclosure
| (In millions) | Total | Quoted prices in active markets for identical assets (Level 1) | Other observable inputs (Level 2) | Unobservable inputs (Level 3) | |||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Cash | $ | 622 | $ | 622 | $ | — | $ | — | |||||||||||||||
| Short-term investments | 181 | 181 | — | — | |||||||||||||||||||
Derivative contract assets | 26 | — | 26 | — | |||||||||||||||||||
Derivative contract liabilities | (64) | — | (64) | — | |||||||||||||||||||
| Contingent future payments from acquisition of Resilient Power Systems Inc. (Note 2) | (31) | — | — | (31) | |||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Cash | $ | 555 | $ | 555 | $ | — | $ | — | |||||||||||||||
| Short-term investments | 1,525 | 1,525 | — | — | |||||||||||||||||||
Derivative contract assets | 28 | — | 28 | — | |||||||||||||||||||
Derivative contract liabilities | (44) | — | (44) | — | |||||||||||||||||||
| December 31 | |||||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Time deposits and certificates of deposit with banks | $ | 181 | $ | 157 | |||||||
| Money market investments | — | 1,368 | |||||||||
| Total short-term investments | $ | 181 | $ | 1,525 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 22, 2017 | |
| 2015 | Feb 24, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.