Liquidity ratios measure the company ability to meet its short-term obligations.
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- Selected Financial Data since 2005
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- Current Ratio since 2005
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Liquidity Ratios (Summary)
Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
---|---|---|---|---|---|---|
Current ratio | ||||||
Quick ratio | ||||||
Cash ratio |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
The analysis of liquidity ratios over the five-year period reveals notable trends regarding the company's short-term financial health and ability to meet its obligations.
- Current Ratio
- The current ratio shows a general declining trend from 2.18 in 2015 to 1.2 in 2019. After a slight dip from 2015 to 2016, it stabilizes somewhat in 2017 and 2018 but then experiences a significant decrease in 2019. This decline suggests a reduced buffer of current assets relative to current liabilities over the period, indicating a potential tightening in working capital management or increased short-term obligations.
- Quick Ratio
- The quick ratio also decreases from 1.46 in 2015 to 0.64 in 2019, showing a similar pattern to the current ratio. The ratio remains relatively stable between 2016 and 2018 but drops notably in 2019. This decline highlights a reduction in liquid assets (excluding inventory) available to cover current liabilities, suggesting that the company's immediate liquidity position is weakening.
- Cash Ratio
- The cash ratio exhibits the most pronounced decline, falling from 0.76 in 2015 to 0.18 in 2019. While the ratio shows a steep decrease mainly between 2015 and 2016, it stays fairly constant through 2017 and 2018 before declining further in 2019. This indicates that cash and cash equivalents relative to current liabilities have become considerably lower, which could pose challenges in covering short-term liabilities solely with cash resources.
Overall, the data suggest the company’s liquidity position has weakened over the period under review. The downward trends across all three liquidity ratios point to a reduction in the company’s ability to cover short-term liabilities with available assets, particularly cash. This pattern may warrant further investigation into working capital management, cash flow sufficiency, and potential impacts on operational flexibility in the short term.
Current Ratio
Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Current assets | ||||||
Current liabilities | ||||||
Liquidity Ratio | ||||||
Current ratio1 | ||||||
Benchmarks | ||||||
Current Ratio, Competitors2 | ||||||
Linde plc | ||||||
Sherwin-Williams Co. |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data over the five-year period reveals notable trends in liquidity and working capital management.
- Current Assets
- Current assets exhibited significant fluctuation throughout the period. After a slight decrease from 24,475 million USD in 2015 to 23,659 million USD in 2016, current assets nearly doubled in 2017 and 2018, reaching 49,893 million USD and 49,603 million USD respectively. However, in 2019, current assets experienced a sharp decline to 9,999 million USD, marking a considerable reduction compared to the previous two years.
- Current Liabilities
- The company's current liabilities followed a similar pattern to current assets. Starting at 11,215 million USD in 2015, liabilities increased steadily to 12,604 million USD in 2016 and then surged significantly to 26,128 million USD in 2017 and remained elevated at 24,715 million USD in 2018. In 2019, there was a pronounced decrease in current liabilities, dropping to 8,346 million USD.
- Current Ratio
- The current ratio, indicative of the company’s short-term liquidity, generally remained above 1.8 during the first four years. It started at 2.18 in 2015, decreased slightly to 1.88 in 2016, then showed a mild improvement to 1.91 in 2017 and 2.01 in 2018. However, in 2019, the ratio fell sharply to 1.20, suggesting a reduced liquidity buffer and increased pressure on short-term obligations relative to assets.
Overall, the data indicates that the company experienced a period of expansion or accumulation of current assets and liabilities between 2017 and 2018, possibly reflecting changes in operational scale or working capital strategy. The sharp decline in both current assets and liabilities in 2019, accompanied by a weakened current ratio, may signify a strategic shift toward leaner working capital, asset disposals, or improved liability management. Nevertheless, the marked reduction in liquidity ratios in 2019 warrants further examination to assess potential impacts on solvency and operational flexibility.
Quick Ratio
Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Cash and cash equivalents | ||||||
Marketable securities | ||||||
Accounts and notes receivable, trade | ||||||
Accounts and notes receivable, other | ||||||
Total quick assets | ||||||
Current liabilities | ||||||
Liquidity Ratio | ||||||
Quick ratio1 | ||||||
Benchmarks | ||||||
Quick Ratio, Competitors2 | ||||||
Linde plc | ||||||
Sherwin-Williams Co. |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The financial data over the period from 2015 to 2019 reveals notable trends in the liquidity position as measured primarily by quick assets, current liabilities, and the quick ratio. The analysis indicates fluctuations and a marked decline in liquidity towards the end of the period.
- Total Quick Assets
- The total quick assets exhibited a relatively stable level around 16,000 US$ million in 2015 and 2016, followed by a substantial increase in 2017 and 2018 to approximately 31,000 US$ million. This suggests a significant accumulation of liquid assets during these years. However, in 2019, there was a sharp decrease to 5,342 US$ million, indicating a considerable reduction in readily available assets.
- Current Liabilities
- Current liabilities showed a rising trend from 11,215 US$ million in 2015 to 12,604 US$ million in 2016. A more than doubling occurred in 2017 and 2018, reaching over 26,000 US$ million and then slightly decreasing to 24,715 US$ million in 2018. In 2019, current liabilities declined significantly to 8,346 US$ million. This pattern suggests volatility in short-term obligations, with a peak in the middle years followed by a notable decrease.
- Quick Ratio
- The quick ratio, which measures the liquidity by comparing quick assets to current liabilities, reveals a declining trend over the period. Starting at 1.46 in 2015, the ratio fell progressively to 1.24 in 2016, 1.2 in 2017, and slightly recovered to 1.25 in 2018. By 2019, the quick ratio dropped significantly to 0.64, indicating that quick assets were insufficient to cover current liabilities. This sharp decline points to a potential weakening in short-term financial stability or an increased reliance on less liquid resources.
In summary, the period shows an initial increase in liquid assets alongside rising current liabilities, maintaining a relatively stable quick ratio around or above 1.2 until 2018. The sharp decreases in both quick assets and current liabilities in 2019, coupled with a swift decline in the quick ratio, suggest a significant change in the liquidity profile, warranting further investigation into the causes, such as asset disposals, restructuring, or changes in working capital management.
Cash Ratio
Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Cash and cash equivalents | ||||||
Marketable securities | ||||||
Total cash assets | ||||||
Current liabilities | ||||||
Liquidity Ratio | ||||||
Cash ratio1 | ||||||
Benchmarks | ||||||
Cash Ratio, Competitors2 | ||||||
Linde plc | ||||||
Sherwin-Williams Co. |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total cash assets
- There was a notable fluctuation in total cash assets during the analyzed period. Initially, cash assets decreased from US$8,577 million at the end of 2015 to US$6,607 million in 2016. This was followed by a significant increase, more than doubling to US$14,394 million by the end of 2017. Subsequently, cash assets remained relatively stable at around US$13,600 million in 2018 but experienced a sharp decline to US$1,540 million in 2019.
- Current liabilities
- Current liabilities demonstrated a consistent upward trend from 2015 through 2017, rising from US$11,215 million to US$26,128 million. In 2018, there was a slight decrease in current liabilities to US$24,715 million, followed by a steep reduction to US$8,346 million in 2019. This pattern suggests a significant deleveraging or reduction of short-term obligations toward the end of the period.
- Cash ratio
- The cash ratio, which measures the liquidity position relative to current liabilities, decreased overall throughout the period. It declined from 0.76 in 2015 to 0.52 in 2016, then stabilized around 0.55 in both 2017 and 2018. In 2019, the cash ratio dropped sharply to 0.18, reflecting a much weaker capacity to cover current liabilities with cash assets during this year.