Archer-Daniels-Midland Company (ADM)
Quick ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 1,368,000 | 1,037,000 | 943,000 | 666,000 | 852,000 |
| Short-term investments | US$ in thousands | 7,228,000 | 109,000 | 46,000 | 61,000 | 3,000 |
| Receivables | US$ in thousands | 4,232,000 | 4,926,000 | 3,343,000 | 2,829,000 | 2,298,000 |
| Total current liabilities | US$ in thousands | 18,662,000 | 24,191,000 | 21,948,000 | 18,182,000 | 13,734,000 |
| Quick ratio | 0.69 | 0.25 | 0.20 | 0.20 | 0.23 |
December 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($1,368,000K
+ $7,228,000K
+ $4,232,000K)
÷ $18,662,000K
= 0.69
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term financial obligations using its most liquid assets. A quick ratio of 1 or higher is generally considered healthy, indicating that a company can cover its current liabilities with its quick assets.
Analyzing Archer-Daniels-Midland Company's quick ratio over the past five years, we observe fluctuations in the company's liquidity position. The quick ratio in 2023 stands at 0.69, a significant improvement from the previous year's ratio of 0.25. This indicates that in 2023, the company had $0.69 of quick assets available to cover each dollar of current liabilities.
The sharp increase in the quick ratio from 2022 to 2023 suggests improved liquidity management by Archer-Daniels-Midland Company during the most recent period. However, it is important to note that the quick ratio was considerably lower in 2021, 2020, and 2019, ranging from 0.20 to 0.23. These lower ratios indicate a relatively weaker ability to meet short-term obligations with quick assets in those years.
Overall, the trend in the quick ratio for Archer-Daniels-Midland Company indicates some variability in the company's liquidity position over the past five years. The notable increase in 2023 is a positive signal of improved liquidity management, but the company may need to sustain and further enhance its liquidity position to ensure it can effectively meet its short-term financial commitments going forward.
Peer comparison
Dec 31, 2023