Archer-Daniels-Midland Company (ADM)

Liquidity ratios

Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 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
Current ratio 1.40 1.44 1.47 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
Quick ratio 0.61 0.65 0.63 0.69 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
Cash ratio 0.41 0.41 0.42 0.46 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

Archer-Daniels-Midland Company's liquidity ratios show fluctuations over the past several quarters. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has displayed a general decreasing trend since December 2020. However, the current ratio remains above 1, indicating that the company has sufficient current assets to cover its current liabilities.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also shown a declining trend, albeit with more variability compared to the current ratio. This indicates that the company's ability to meet its short-term obligations without relying on inventory has been weakening over time.

In contrast, the cash ratio, which focuses solely on the most liquid assets like cash and cash equivalents to cover current liabilities, has displayed significant fluctuations. While the cash ratio has generally decreased since December 2020, the ratio remains relatively low, indicating that the company may have limited immediate access to highly liquid assets to meet its short-term obligations.

Overall, Archer-Daniels-Midland Company's liquidity position appears to have weakened slightly in recent quarters, as evidenced by the decreasing trends in both the current and quick ratios. Management should continue to monitor these ratios closely to ensure the company maintains an appropriate level of liquidity to meet its short-term financial obligations.

Additional liquidity measure

Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 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
Cash conversion cycle days 42.16 42.04 42.66 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

The cash conversion cycle of Archer-Daniels-Midland Company has shown fluctuations over the past eight quarters. The cycle represents the time it takes for the company to convert its resources or inputs into cash flows from sales, reflecting operational efficiency and liquidity management.

From December 2019 to June 2020, there was a general decline in the cash conversion cycle, indicating a more efficient utilization of resources and quicker conversion of inventory into sales and eventually into cash. However, in the following quarters up to March 2021, there was an increase in the cycle, peaking at 68.00 days, suggesting a longer time to convert resources to cash.

From March 2021 to September 2024, the cash conversion cycle fluctuated between 40 and 57 days, indicating varying efficiency levels in managing inventory, accounts receivable, and accounts payable. Generally, a shorter cash conversion cycle is preferred as it signifies the company can generate cash quickly from its operations.

It is essential for Archer-Daniels-Midland Company to continuously monitor and manage its cash conversion cycle to ensure optimal working capital management and efficient operations. Any improvements in inventory turnover, accounts receivable collection, and payables management can positively impact the cycle, leading to improved liquidity and financial health for the company.