General Motors Company (GM)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.08 | 1.10 | 1.10 | 1.01 | 0.88 |
| Quick ratio | 0.41 | 0.49 | 0.48 | 0.46 | 0.35 |
| Cash ratio | 0.28 | 0.34 | 0.39 | 0.36 | 0.27 |
The liquidity ratios of General Motors Company have exhibited some fluctuations over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, decreased from 1.25 in 2021 to 1.10 in 2023. This suggests a slight decline in the company's short-term liquidity position.
Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also decreased from 0.69 in 2021 to 0.48 in 2023. This indicates a potential decrease in the company's ability to meet its short-term obligations without relying on inventory.
Furthermore, the cash ratio, which measures the company's ability to cover its short-term liabilities with its cash and cash equivalents, showed a decreasing trend from 0.63 in 2021 to 0.40 in 2023. This suggests a potential reduction in the company's ability to settle its short-term obligations solely with its readily available cash resources.
Overall, the liquidity ratios of General Motors Company have demonstrated a decreasing trend over the past three years, raising some concerns about the company's ability to meet its short-term obligations. It would be prudent for stakeholders to closely monitor the company's liquidity position and its ability to generate sufficient cash flows to support its short-term financial needs.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -1,679.14 | -4,020.05 | -3.44 | -9.61 | -14.22 |
The cash conversion cycle (CCC) measures the efficiency of a company's working capital management by analyzing the time it takes to convert inventory and receivables into cash and then pay off its payables. A negative CCC indicates that General Motors Company's cash is being collected from customers before it needs to pay suppliers, thereby effectively generating cash through its operating cycle.
From the data provided, General Motors' CCC has improved significantly over the past five years, decreasing from -16.95 days in 2019 to -3.80 days in 2023. This significant improvement suggests that the company has been operating with a more efficient working capital management, aligning its inventory management, accounts receivable collection, and accounts payable payment cycles.
The consistently negative CCC indicates that General Motors has been able to maintain an efficient cash conversion cycle, which may be attributed to effective inventory management, prompt collection of receivables, and delayed payment of payables. This efficient management of working capital could contribute to the company's cash flow and overall liquidity position, enhancing its financial health and operational efficiency.