Archer-Daniels-Midland Company (ADM)

Liquidity ratios

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Current ratio 1.60 1.69 1.63 1.51 1.46 1.51 1.47 1.42 1.45 1.58 1.65 1.58 1.50 1.64 1.72 1.51 1.55 1.60 1.55 1.52
Quick ratio 0.30 0.76 0.73 0.62 0.25 0.26 0.25 0.54 0.56 0.69 0.66 0.56 0.52 0.65 0.69 0.71 0.55 0.27 0.26 0.26
Cash ratio 0.07 0.51 0.51 0.42 0.05 0.05 0.04 0.39 0.41 0.48 0.46 0.38 0.36 0.46 0.49 0.57 0.39 0.08 0.07 0.07

Archer-Daniels-Midland Company's liquidity ratios, namely the current ratio, quick ratio, and cash ratio, show mixed results over the past few quarters. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has generally been above 1, indicating a healthy liquidity position. However, there has been some fluctuation in this ratio over the quarters, with the highest ratio of 1.69 observed in September 2023 and the lowest ratio of 1.42 in March 2022.

On the other hand, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has shown more variability. The quick ratio has ranged from a low of 0.25 in December 2022 to a high of 0.76 in September 2023. This indicates that the company may have some difficulty meeting its short-term obligations without relying on inventory in certain quarters.

Lastly, the cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, has also exhibited fluctuations over the periods. The cash ratio has been as low as 0.04 in June 2022 and as high as 0.57 in March 2020. This suggests that the company's ability to meet its short-term obligations solely with cash has varied significantly.

Overall, while Archer-Daniels-Midland Company generally maintains a current ratio above 1, indicating a healthy liquidity position, the fluctuating quick ratio and cash ratio point to potential challenges in meeting short-term obligations without relying on inventory or other current assets in certain periods. It would be important for the company to closely monitor its liquidity position and maintain a balance between current assets and liabilities to ensure continued financial stability.

Additional liquidity measure

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Cash conversion cycle days 40.28 41.13 41.99 48.93 44.77 44.26 57.74 65.84 51.58 49.42 58.97 68.00 60.15 49.05 43.43 46.54 45.69 43.64 46.17 47.27

The cash conversion cycle of Archer-Daniels-Midland Company has exhibited fluctuations over the past five years. The cycle represents the time it takes for the company to convert its investments in raw materials into cash from sales.

Analyzing the trend, we observe that the cash conversion cycle decreased in the latter half of 2023 compared to the peak in March 2023. This indicates that the company was able to manage its inventory and accounts receivable more efficiently towards the end of the year.

Over a five-year period, the company experienced some variability in its cash conversion cycle, with notable spikes in the cycle duration in some quarters, such as in March 2022 and March 2021. These periods may indicate challenges in managing inventory, collecting receivables, or paying suppliers promptly.

On the positive side, the company has generally kept its cash conversion cycle below 60 days, which suggests that it is adept at managing its working capital effectively. However, the fluctuations observed highlight the importance of continuous monitoring and improvement in managing the company's operating cycle efficiently.