General Mills Inc. (NYSE:GIS)

Current Ratio

The current ratio exhibits a declining trend over the six-year period, decreasing from 0.81 in 2014 to 0.59 in 2019. This decline indicates a reduction in current assets relative to current liabilities, suggesting a diminishing short-term liquidity position. There is a noticeable drop between 2017 and 2018, from 0.76 to 0.56, which represents a significant weakening in the ability to cover short-term obligations.

Quick Ratio

The quick ratio also follows a downward trajectory from 0.43 in 2014 to 0.30 in 2019. The decrease is somewhat consistent, with a slight recovery observed in 2016 and 2017 before continuing to decline. The ratio's lower values relative to the current ratio imply a higher reliance on inventory or less liquid current assets, which may affect the company's capacity to meet immediate liabilities without relying on inventory sales.

Cash Ratio

The cash ratio remains relatively low throughout the period, fluctuating between 0.05 and 0.16. It decreases sharply from 0.16 in 2014 to 0.07 in 2015, shows a minor recovery in 2016 and 2017, then falls again to 0.05 in 2018 and slightly rises to 0.06 in 2019. This consistently low level signals limited cash and cash equivalents to cover current liabilities, highlighting a potential vulnerability in very short-term liquidity.

Current Assets

Current assets showed a decline from 4,393,500 thousand US$ in 2014 to 3,785,700 thousand US$ in 2015. Subsequent years saw a moderate recovery, with current assets increasing to 4,186,500 thousand US$ by 2019. Overall, the trend indicates initial contraction followed by gradual expansion in current assets over the six-year period.

Current Liabilities

Current liabilities decreased between 2014 and 2015, dropping from 5,423,500 thousand US$ to 4,890,100 thousand US$. Between 2016 and 2017, current liabilities increased steadily, peaking sharply in 2018 at 7,341,900 thousand US$, before slightly decreasing to 7,087,100 thousand US$ in 2019. This pattern reveals an increasing short-term debt obligation over recent years, with a notable surge in 2018.

Current Ratio

The current ratio remained below 1 throughout the period, indicating current liabilities consistently exceeded current assets. It started at 0.81 in 2014 and showed a generally declining pattern, falling to 0.56 in 2018, followed by a slight improvement to 0.59 in 2019. The downward trend reflects tightening liquidity and a potentially weakened short-term financial position, with slight stabilization towards the end.

Overall Analysis

The data depict a company facing challenges in maintaining liquidity, as evidenced by current ratios consistently below 1 and increasing current liabilities especially in later years. Although current assets recovered somewhat after an initial decline, they did not keep pace with liabilities. The pronounced increase in current liabilities in 2018 signals heightened short-term financial commitments, adversely impacting liquidity metrics. The slight improvement in the current ratio in 2019 may indicate early signs of stabilization but remains at a level that suggests ongoing liquidity stress.

The analysis of the available financial data highlights several key trends in liquidity over the six-year period.

Total Quick Assets

The value of total quick assets fluctuated between approximately 1.7 billion and 2.35 billion US dollars. Beginning at 2.35 billion in 2014, it dropped to a low of around 1.72 billion in 2015. Subsequently, the figure rose again in 2016 and 2017, reaching above 2.19 billion before declining slightly in 2018 and then moderately increasing to about 2.13 billion in 2019. These variations indicate moderate volatility in liquid assets readily available within a year.

Current Liabilities

Current liabilities showed a general upward trend, moving from 5.42 billion US dollars in 2014 to a peak of approximately 7.34 billion in 2018, followed by a slight decrease to 7.09 billion in 2019. This rise is notably steep in the latter years, indicating growing short-term obligations which may affect liquidity and financial flexibility.

Quick Ratio

The quick ratio, which measures the company’s ability to meet short-term liabilities with its most liquid assets, correspondingly decreased over time. Starting at 0.43 in 2014, it declined to as low as 0.28 in 2018 before a marginal increase to 0.30 in 2019. The ratio consistently remaining below 1 suggests limited coverage of current liabilities by quick assets throughout the observed period, with a particularly weaker liquidity position in the most recent years.

In summary, despite some recovery in quick assets after 2015, the substantial rise in current liabilities outpaced these assets, resulting in a declining quick ratio. This trend points to potential liquidity pressures and a diminishing buffer to cover short-term obligations using immediate assets from 2014 to 2019.

Total cash assets

The total cash assets exhibited significant fluctuations over the analyzed period. Starting at 867,300 thousand US dollars in May 2014, the amount dropped substantially to 334,200 thousand in May 2015. This was followed by a recovery phase with an increase to 763,700 thousand in May 2016 and a slight rise to 766,100 thousand in May 2017. Subsequently, there was another notable decline to 399,000 thousand in May 2018, before a modest increase to 450,000 thousand in May 2019. Overall, the cash assets showed a pattern of volatility with periods of both sharp decreases and partial recoveries.

Current liabilities

The current liabilities showed a general increasing trend with some variability. Beginning at 5,423,500 thousand US dollars in May 2014, liabilities decreased to 4,890,100 thousand by May 2015. Subsequently, they rose marginally to 5,014,700 thousand in May 2016 and increased further to 5,330,800 thousand in May 2017. A significant jump occurred in May 2018, when liabilities increased markedly to 7,341,900 thousand, followed by a slight decline to 7,087,100 thousand in May 2019. This upward trend in liabilities, especially the marked increase in 2018, suggests growing short-term obligations during the later years of the period.

Cash ratio

The cash ratio remained consistently low throughout the period, indicating limited liquidity in terms of cash readily available to cover current liabilities. It began at 0.16 in May 2014, dropped sharply to 0.07 in May 2015, and then improved somewhat to 0.15 and 0.14 in May 2016 and May 2017, respectively. However, there was a further decline to 0.05 in May 2018, followed by a slight increase to 0.06 in May 2019. The fluctuating yet low cash ratio points to a pattern where cash reserves were generally insufficient to cover current liabilities fully, which may imply reliance on other means of liquidity or financing to meet short-term obligations.