Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Monsanto Co., liquidity ratios
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
- Current Ratio
- The current ratio demonstrates an overall declining trend from 2.29 in 2012 to a lower range around 1.21 in 2016, followed by a slight improvement to 1.35 in 2017. This indicates a reduction in the company's short-term liquidity over the period, suggesting a diminished buffer to cover current liabilities with current assets.
- Quick Ratio
- Similarly, the quick ratio declines from 1.45 in 2012 to a low of 0.66 in 2016, with a modest rebound to 0.76 in 2017. The more pronounced decrease than the current ratio reflects a reduction in more liquid assets excluding inventory, signaling potential challenges in meeting immediate obligations without relying on inventory liquidation.
- Cash Ratio
- The cash ratio shows the most significant decline over the period, starting at 0.85 in 2012 and falling sharply to 0.26 in 2016, with a slight increase to 0.29 in 2017. This suggests a marked decrease in the company's most liquid assets, cash and cash equivalents, indicating constrained liquidity and a greater reliance on other current assets to meet short-term liabilities.
Current Ratio
Monsanto Co., current ratio calculation, comparison to benchmarks
| Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | Aug 31, 2013 | Aug 31, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current assets | 8,651) | 8,157) | 10,625) | 9,675) | 10,077) | 9,658) | |
| Current liabilities | 6,398) | 6,729) | 5,177) | 5,112) | 4,336) | 4,221) | |
| Liquidity Ratio | |||||||
| Current ratio1 | 1.35 | 1.21 | 2.05 | 1.89 | 2.32 | 2.29 | |
| Benchmarks | |||||||
| Current Ratio, Competitors2 | |||||||
| lululemon athletica inc. | — | — | — | — | — | — | |
| Nike Inc. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
1 2017 Calculation
Current ratio = Current assets ÷ Current liabilities
= 8,651 ÷ 6,398 = 1.35
2 Click competitor name to see calculations.
The analysis of the financial data over the six-year period reveals several noteworthy trends related to liquidity and short-term financial health.
- Current Assets
- The current assets exhibited fluctuations with an initial increase from 9,658 million US dollars in 2012 to a peak of 10,625 million US dollars in 2015. Following this peak, there was a notable decline to 8,157 million US dollars in 2016, with a slight recovery to 8,651 million US dollars in 2017. This pattern indicates variability in the company's liquid or near-liquid resources over the period.
- Current Liabilities
- Current liabilities showed a general upward trend from 4,221 million US dollars in 2012 to a high of 6,729 million US dollars in 2016. There was a reduction in 2017 to 6,398 million US dollars, but liabilities remained significantly higher than in the earlier years. This increase in short-term obligations suggests growing demands on the company's working capital.
- Current Ratio
- The current ratio, representing the coverage of current liabilities by current assets, started relatively strong at 2.29 in 2012 and remained stable in 2013 at 2.32. However, it declined to 1.89 in 2014, with a slight improvement to 2.05 in 2015. A significant drop followed in 2016 to 1.21, indicating a diminished liquidity cushion. The ratio slightly improved to 1.35 in 2017 but remained at a lower level compared to earlier years, reflecting increased short-term financial risk.
Overall, the company's liquidity position weakened over the period, marked by decreased current assets in the latter years and substantial growth in current liabilities. The declining current ratio highlights a potential tightening in the company's ability to cover short-term obligations, which may warrant examination of working capital management strategies.
Quick Ratio
Monsanto Co., quick ratio calculation, comparison to benchmarks
| Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | Aug 31, 2013 | Aug 31, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Cash and cash equivalents | 1,856) | 1,676) | 3,701) | 2,367) | 3,668) | 3,283) | |
| Short-term investments | 8) | 60) | 47) | 40) | 254) | 302) | |
| Trade receivables, net | 2,161) | 1,926) | 1,636) | 2,014) | 1,715) | 1,897) | |
| Miscellaneous receivables | 827) | 755) | 803) | 817) | 748) | 620) | |
| Total quick assets | 4,852) | 4,417) | 6,187) | 5,238) | 6,385) | 6,102) | |
| Current liabilities | 6,398) | 6,729) | 5,177) | 5,112) | 4,336) | 4,221) | |
| Liquidity Ratio | |||||||
| Quick ratio1 | 0.76 | 0.66 | 1.20 | 1.02 | 1.47 | 1.45 | |
| Benchmarks | |||||||
| Quick Ratio, Competitors2 | |||||||
| lululemon athletica inc. | — | — | — | — | — | — | |
| Nike Inc. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
1 2017 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 4,852 ÷ 6,398 = 0.76
2 Click competitor name to see calculations.
- Total Quick Assets
- There is a fluctuation in total quick assets over the observed periods. The value starts at 6,102 million USD in 2012, increasing slightly to 6,385 million USD in 2013. A significant decline is noted in 2014, dropping to 5,238 million USD, followed by a recovery in 2015 to 6,187 million USD. However, in the last two years, total quick assets decrease again to 4,417 million USD in 2016 and slightly rebound to 4,852 million USD in 2017. The overall trend suggests volatility with two notable downturns.
- Current Liabilities
- Current liabilities show a general upward trend over the six years. Starting at 4,221 million USD in 2012, they gradually increase each year, reaching 6,729 million USD in 2016, which is the peak value. In 2017, a slight reduction to 6,398 million USD is observed, yet liabilities remain significantly higher compared to the beginning of the period. This upward trend indicates increasing short-term obligations.
- Quick Ratio
- The quick ratio demonstrates a declining trajectory during the time frame. From 1.45 in 2012 and a marginal increase to 1.47 in 2013, the ratio sharply decreases to 1.02 in 2014. A modest improvement is noted in 2015, raising to 1.20, but this is followed by a substantial fall to 0.66 in 2016. A slight recovery occurs in 2017 to 0.76, but the ratio remains below 1.0, which may indicate potential liquidity concerns. The decline in the quick ratio aligns with the decrease in quick assets and the increased current liabilities.
Cash Ratio
Monsanto Co., cash ratio calculation, comparison to benchmarks
| Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | Aug 31, 2013 | Aug 31, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Cash and cash equivalents | 1,856) | 1,676) | 3,701) | 2,367) | 3,668) | 3,283) | |
| Short-term investments | 8) | 60) | 47) | 40) | 254) | 302) | |
| Total cash assets | 1,864) | 1,736) | 3,748) | 2,407) | 3,922) | 3,585) | |
| Current liabilities | 6,398) | 6,729) | 5,177) | 5,112) | 4,336) | 4,221) | |
| Liquidity Ratio | |||||||
| Cash ratio1 | 0.29 | 0.26 | 0.72 | 0.47 | 0.90 | 0.85 | |
| Benchmarks | |||||||
| Cash Ratio, Competitors2 | |||||||
| lululemon athletica inc. | — | — | — | — | — | — | |
| Nike Inc. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
1 2017 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 1,864 ÷ 6,398 = 0.29
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets exhibited a fluctuating pattern over the six-year period. Starting at 3,585 million US dollars in 2012, the amount increased marginally to 3,922 million in 2013. However, there was a notable decline in 2014 to 2,407 million, followed by a recovery in 2015 to 3,748 million. Subsequently, cash assets dropped sharply to 1,736 million in 2016 and remained relatively stable with a slight increase to 1,864 million in 2017.
- Current Liabilities
- Current liabilities showed a steady upward trend overall. Beginning at 4,221 million US dollars in 2012, liabilities increased gradually through to 2015, reaching 5,177 million. There was a marked rise in 2016 to 6,729 million, followed by a slight reduction to 6,398 million in 2017. Despite the minor decrease at the end, the overall level of current liabilities was significantly higher in 2017 compared to 2012.
- Cash Ratio
- The cash ratio, which measures liquidity by comparing cash assets to current liabilities, reflected the trends seen in cash assets and liabilities. The ratio started at 0.85 in 2012, increased slightly to 0.90 in 2013, then declined considerably to 0.47 in 2014. Although there was some improvement in 2015 to 0.72, the ratio dropped sharply to 0.26 in 2016, indicating reduced liquidity, and only modestly increased to 0.29 in 2017. This suggests a weakening liquidity position over the period, primarily driven by declining cash assets and rising current liabilities.