Archer-Daniels-Midland Company (ADM)

Liquidity ratios

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Current ratio 1.60 1.46 1.45 1.50 1.55
Quick ratio 0.69 0.25 0.20 0.20 0.23
Cash ratio 0.46 0.05 0.05 0.04 0.06

Archer-Daniels-Midland Company's liquidity ratios show variations over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with current assets, has generally been above 1, indicating that the company has had sufficient current assets to meet its current liabilities. However, there was a slight decrease in the ratio from 1.55 in 2019 to 1.46 in 2022, before improving to 1.60 in 2023. This suggests a positive trend in the company's short-term liquidity position.

On the other hand, the quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has shown more fluctuation. The ratio was particularly low in 2022 at 0.25, indicating a potential vulnerability to cover immediate liabilities without relying on selling inventory. However, there was a significant improvement to 0.69 in 2023, suggesting a stronger ability to cover short-term obligations without relying on inventory sales.

The cash ratio, which measures the company's ability to cover current liabilities with cash and cash equivalents, has also shown variability. The ratio has generally been low, but there was a notable increase from 0.05 in 2022 to 0.46 in 2023, indicating a significant improvement in the company's ability to cover short-term obligations with cash on hand.

Overall, while Archer-Daniels-Midland Company's liquidity ratios have fluctuated over the years, the recent improvements in the current ratio, quick ratio, and cash ratio suggest an enhanced short-term liquidity position for the company in 2023 compared to previous years.


Additional liquidity measure

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Cash conversion cycle days 40.28 44.77 51.58 60.15 45.69

Archer-Daniels-Midland Company's cash conversion cycle has fluctuated over the past five years, indicating changes in the efficiency of its working capital management. The company's cash conversion cycle decreased from 45.69 days in 2019 to 40.28 days in 2023, suggesting an improvement in the company's ability to convert its resources efficiently.

A lower cash conversion cycle indicates that the company is able to sell its inventory, collect receivables, and pay off payables more quickly, which can lead to better liquidity and cash flow management.

Overall, the decreasing trend in Archer-Daniels-Midland Company's cash conversion cycle over the years is a positive sign of effective working capital management, which could potentially improve the company's overall financial health and operational efficiency.