Advanced Micro Devices Inc. (NASDAQ:AMD)

The liquidity position, as indicated by the observed ratios, demonstrates a generally positive trend over the five-year period. All three measured ratios – current, quick, and cash – exhibit fluctuations but generally suggest strengthening short-term solvency. The current ratio consistently increased, while the quick and cash ratios showed more moderate changes with some year-over-year variation.

Current Ratio

The current ratio experienced a consistent upward trend, increasing from 2.02 in 2021 to 2.85 in 2025. This indicates a growing ability to cover short-term liabilities with short-term assets. The increase suggests improved operational efficiency or a more conservative approach to managing current assets and liabilities.

Quick Ratio

The quick ratio showed a modest increase overall, moving from 1.49 in 2021 to 1.78 in 2025. However, the progression wasn’t linear; a slight decrease was observed between 2022 and 2023, from 1.57 to 1.51, before resuming an upward trajectory. This suggests that while the company’s ability to meet short-term obligations with its most liquid assets is generally improving, it is less consistent than the trend observed in the current ratio.

Cash Ratio

The cash ratio exhibited the most volatility of the three ratios. It increased from 0.85 in 2021 to 0.92 in 2022, then decreased to 0.86 in 2023 and further to 0.70 in 2024, before a significant increase to 1.12 in 2025. This fluctuation suggests changes in the company’s cash management practices or a response to specific short-term financial needs. The substantial increase in 2025 indicates a notably stronger capacity to cover immediate liabilities with available cash.

In summary, the observed liquidity ratios suggest a strengthening ability to meet short-term obligations. While the quick and cash ratios experienced some fluctuations, the overall trend across all three ratios is positive, indicating improved financial flexibility and reduced liquidity risk.

The current ratio demonstrates a consistent upward trend over the five-year period. This indicates an improving ability to cover short-term obligations with short-term assets.

Current Ratio Trend

The current ratio increased from 2.02 in 2021 to 2.85 in 2025. This represents a cumulative increase of 41.1% over the observed timeframe.

Year-over-Year Changes

From 2021 to 2022, the current ratio increased by 16.8%. The increase from 2022 to 2023 was 6.4%, a deceleration in the growth rate. The ratio continued to climb from 2023 to 2024, increasing by 4.4%, and then by 8.8% from 2024 to 2025. While the ratio consistently increased, the magnitude of the year-over-year gains varied.

Underlying Components

Both current assets and current liabilities increased over the period. However, the growth in current assets consistently outpaced the growth in current liabilities, driving the improvement in the current ratio. Current assets grew from US$8,583 million in 2021 to US$26,947 million in 2025, while current liabilities increased from US$4,240 million to US$9,455 million over the same period.

The sustained increase in the current ratio suggests strengthening short-term financial health. The company appears increasingly capable of meeting its immediate obligations, potentially providing greater flexibility in managing its working capital.

The quick ratio demonstrates a generally positive trend over the five-year period. Initial values indicate a reasonable ability to meet short-term obligations with highly liquid assets. Subsequent years show fluctuations, but ultimately an improvement in this metric.

Overall Trend

The quick ratio experienced an initial increase from 1.49 in 2021 to 1.57 in 2022. A slight decrease to 1.51 was observed in 2023, followed by a rise to 1.56 in 2024. The most significant increase occurred between 2024 and 2025, with the quick ratio reaching 1.78.

Quick Asset Evolution

Total quick assets increased consistently throughout the period, moving from US$6,314 million in 2021 to US$16,867 million in 2025. This growth in liquid assets contributes to the overall improvement in the quick ratio.

Liability Changes

Current liabilities also increased over the five years, rising from US$4,240 million in 2021 to US$9,455 million in 2025. However, the growth in quick assets outpaced the growth in current liabilities, resulting in the observed improvements in the quick ratio.

Ratio Interpretation

A quick ratio consistently above 1.0 suggests the entity possesses sufficient liquid assets to cover its immediate liabilities. The increasing trend indicates a strengthening liquidity position, potentially providing greater financial flexibility.

The substantial increase in the quick ratio in 2025 warrants further investigation to determine the underlying drivers, such as changes in working capital management or asset composition.

The cash ratio exhibited fluctuations over the five-year period. Initially, the ratio demonstrated an increase followed by a decline, culminating in a significant rise in the most recent year.

Overall Trend

The cash ratio began at 0.85 in 2021, increased to 0.92 in 2022, then decreased to 0.86 in 2023 and further to 0.70 in 2024. A substantial increase to 1.12 was observed in 2025.

Year-over-Year Changes

From 2021 to 2022, the cash ratio increased by 0.07, indicating an improved ability to cover current liabilities with immediately available cash. The subsequent year saw a slight decrease of 0.06 from 2022 to 2023. A more pronounced decrease of 0.16 occurred between 2023 and 2024. However, the most recent period, 2024 to 2025, showed a considerable improvement with an increase of 0.42.

Relationship to Underlying Components

Total cash assets increased from US$3,608 million in 2021 to US$10,552 million in 2025, although there were interim decreases in 2023 and 2024. Current liabilities consistently increased throughout the period, rising from US$4,240 million in 2021 to US$9,455 million in 2025. The cash ratio’s fluctuations reflect the interplay between these two components; the significant increase in 2025 is attributable to the substantial rise in cash assets combined with a continued, but slower, increase in current liabilities.

The observed trend suggests a strengthening liquidity position in the final year of the analyzed period, despite consistently increasing current liabilities.