Keurig Dr Pepper Inc. (NASDAQ:KDP)

Current Ratio

The current ratio exhibited a relatively stable trend throughout 2019, fluctuating between 0.32 and 0.35. During 2020, there was a slight decline, with values generally hovering around 0.31 to 0.33. Beginning in 2021, the current ratio showed a consistent upward movement, rising from 0.37 in the first quarter to 0.47 by the end of the year, and further increasing to 0.54 and 0.56 in the first two quarters of 2022. This upward trend in recent periods may suggest an improvement in short-term liquidity and the company's ability to cover current liabilities with current assets.

Quick Ratio

The quick ratio followed a pattern similar to the current ratio, with relatively minor fluctuations in 2019, ranging between 0.17 and 0.19. In 2020, the ratio declined somewhat, reaching its lowest point at 0.16 in the second quarter and remaining near 0.17 by the end of the year. Starting in 2021, there was a marked improvement, as the ratio increased from 0.20 to 0.26 by the fourth quarter and slightly rising further to 0.28 in the first half of 2022. This strengthening quick ratio indicates enhanced liquidity when excluding inventories, reflecting a more conservative assessment of the company’s ability to meet short-term obligations.

Cash Ratio

The cash ratio remained consistently low over the entire period but showed some signs of improvement. From a baseline of 0.02 in most quarters of 2019, the ratio stayed near this level in early 2020, with occasional minor increases to 0.03. Notably, the ratio rose more significantly in 2021, reaching 0.09 by the fourth quarter, which represents a notable improvement in readily available cash or cash equivalents relative to current liabilities. Although it decreased slightly to 0.08 in mid-2022, the overall trend since 2020 indicates strengthened immediate liquidity, enhancing the company's capacity to cover current liabilities with cash assets.

The analysis of the quarterly financial data reveals several notable trends in the liquidity position over the observed periods.

Current Assets

Current assets displayed a gradual upward trajectory from March 31, 2019, through June 30, 2022. Starting at approximately US$ 2,162 million, current assets increased steadily, reaching US$ 3,771 million by the latest period. This represents a significant accumulation of short-term resources available to the company over the examined timeframe.

Current Liabilities

Current liabilities experienced some fluctuations but generally remained within a narrower range compared to current assets. Beginning at around US$ 6,656 million, they rose to a peak near US$ 7,694 million at the end of 2020, before trending downward and then stabilizing between approximately US$ 6,448 million and US$ 6,761 million throughout 2021 and mid-2022.

Current Ratio

The current ratio exhibited a consistent improvement trend. Initially below 0.35 in early 2019, indicating relatively weak liquidity, the ratio showed minor fluctuations until the end of 2020, when it was approximately 0.31, reflecting a tighter short-term liquidity position. Starting in 2021, the current ratio improved markedly, rising to 0.56 by June 30, 2022. This suggests an enhanced ability to cover short-term obligations with current assets and a stronger overall liquidity position compared to prior periods.

Overall, the data indicate a positive development in managing short-term financial health. The company has increased its current assets substantially, while current liabilities have not increased proportionally, resulting in a significantly higher current ratio. This improvement in liquidity metrics may reflect strategic management decision-making aimed at strengthening the company’s capacity to meet its short-term liabilities.

The financial data reveals several key trends related to liquidity for the periods under review.

Total quick assets

The total quick assets exhibit a general upward trajectory over the examined quarters. Starting at 1,145 million USD in March 2019, they experienced fluctuations but maintained an overall increase, reaching 1,880 million USD by June 2022. Notably, there are peaks in December 2021 (1,716 million USD) and successive growth into the first half of 2022.

Current liabilities

Current liabilities display a somewhat volatile pattern. Beginning at 6,656 million USD in March 2019, liabilities peaked around the end of 2020, with values nearing 7,694 million USD in December 2020. Thereafter, a downward movement is apparent, with liabilities declining to 6,448 million USD by December 2021 before a modest increase to 6,761 million USD in June 2022.

Quick ratio

The quick ratio, a measure of short-term liquidity, shows improvement over the period. It started at 0.17 in March 2019, remaining relatively stable with minor fluctuations until late 2020. Beginning in 2021, the ratio climbed steadily, reaching 0.28 in both March and June 2022. This represents an enhanced ability to cover immediate liabilities with liquid assets.

In summary, the company appears to have strengthened its liquidity position over the periods presented. The growth in quick assets, combined with a reduction and subsequent moderate stabilization in current liabilities, has driven improvements in the quick ratio. These trends suggest a more robust short-term financial standing, potentially affording greater flexibility in meeting immediate obligations.

The data reveals notable fluctuations in total cash assets over the analyzed periods, with a general increasing trend from early 2019 through mid-2022. Beginning at US$129 million in March 2019, the total cash assets experienced some short-term declines but showed significant growth starting in early 2020. The peak values occur near the end of 2021 and the first quarter of 2022, reaching US$594 million and US$554 million respectively, indicating improved liquidity positions during this timeframe.

Current liabilities exhibit relative stability, fluctuating moderately within a narrow range throughout the periods. From approximately US$6,656 million in March 2019, current liabilities increased modestly and peaked at roughly US$7,694 million in December 2020. Following this, the liabilities gradually decreased, settling around US$6,761 million by June 2022. This pattern suggests controlled management of short-term obligations despite external financial conditions.

The cash ratio, which measures liquidity by comparing cash assets against current liabilities, consistently remains low but shows a gradual improvement. Initially steady near 0.02, the ratio rises incrementally after the first quarter of 2020, reaching its highest values of 0.09 in late 2021 and early 2022. This improvement indicates enhanced ability to cover immediate liabilities with cash, although the ratio remains relatively conservative.

Total Cash Assets

Started at US$129 million in March 2019, experienced some dips but showed a distinct upward trajectory beginning in 2020, peaking near US$594 million in December 2021 and slightly declining thereafter.

Current Liabilities

Remained relatively stable throughout the period, with a slight increase up to December 2020 reaching just under US$7,700 million, followed by a gradual decrease toward mid-2022.

Cash Ratio

Initially stable around 0.02, this liquidity measure improved post-March 2020, hitting peaks of approximately 0.09 in late 2021 to early 2022, indicating better cash coverage for current liabilities over time.

Overall, the financial data suggests a strengthening liquidity position despite steady current liabilities. The increase in total cash assets contributes to an enhanced cash ratio, supporting the company's capacity to meet short-term obligations more readily than in prior years.