General Motors Company (GM)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.13 | 1.08 | 1.10 | 1.10 | 1.01 |
| Quick ratio | 0.28 | 0.28 | 0.34 | 0.39 | 0.36 |
| Cash ratio | 0.28 | 0.28 | 0.34 | 0.39 | 0.36 |
General Motors Company's liquidity ratios, including the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term financial obligations.
The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown a slight improvement from 1.01 in December 2020 to 1.13 in December 2024. This indicates that General Motors has sufficient current assets to cover its current liabilities, with a higher current ratio generally seen as more favorable.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. General Motors' quick ratio has fluctuated over the years, ranging from 0.28 in December 2023 and 2024 to 0.39 in December 2021. A quick ratio below 1 suggests that the company may have difficulty meeting its short-term obligations without relying on inventory sales.
The cash ratio, which focuses solely on the company's ability to cover its current liabilities with cash and cash equivalents, has remained stable at 0.28 from December 2023 to 2024. This ratio indicates the proportion of immediate liquidity available to General Motors, with a higher cash ratio considered more favorable for a company's financial health.
In conclusion, while General Motors Company's current ratio has shown improvement over the years, its quick ratio and cash ratio have remained relatively low, suggesting potential liquidity challenges in meeting short-term obligations without relying on inventory or other assets. Further analysis and monitoring of liquidity position may be warranted to ensure the company's financial stability.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 32.41 | 42.51 | 41.31 | 43.44 | 34.33 |
The cash conversion cycle is a measure of how efficiently a company manages its liquidity in terms of converting its inventory and accounts receivable into cash. For General Motors Company, the trend in the cash conversion cycle from December 31, 2020, to December 31, 2024, shows fluctuation.
On December 31, 2020, the cash conversion cycle was 34.33 days, indicating that the company took approximately 34 days to convert its investments in inventory and accounts receivable into cash. Over the following years, there was variability in the cash conversion cycle:
- By December 31, 2021, the cash conversion cycle increased to 43.44 days, suggesting a longer time to convert investments into cash.
- In the subsequent years, the cycle decreased to 41.31 days on December 31, 2022, increased to 42.51 days on December 31, 2023, and then decreased again to 32.41 days by December 31, 2024.
Overall, fluctuations in the cash conversion cycle may indicate changes in the efficiency of General Motors Company's management of cash flows, working capital, and inventory turnover. It is essential for the company to monitor and manage its cash conversion cycle effectively to optimize its liquidity and operational efficiency.