Keurig Dr Pepper Inc (KDP)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.49 | 0.38 | 0.47 | 0.47 | 0.31 |
| Quick ratio | 0.28 | 0.20 | 0.28 | 0.28 | 0.19 |
| Cash ratio | 0.06 | 0.03 | 0.07 | 0.09 | 0.04 |
From the provided data, we can analyze the liquidity ratios of Keurig Dr Pepper Inc over a five-year period.
1. Current Ratio:
- The current ratio indicates the company's ability to meet short-term obligations with its current assets. Keurig Dr Pepper's current ratio has shown fluctuations over the years, ranging from as low as 0.31 in 2020 to a peak of 0.49 in 2024. A current ratio below 1 suggests that the company may have difficulty meeting its short-term liabilities with its current assets alone.
2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Keurig Dr Pepper's quick ratio has also varied during the period, with values ranging from 0.19 in 2020 to 0.28 in 2021, 2022, and 2024. A quick ratio below 1 indicates that the company may struggle to pay off its current liabilities without relying on selling inventory.
3. Cash Ratio:
- The cash ratio focuses solely on the most liquid assets, cash and cash equivalents, to evaluate the company's ability to cover its current liabilities. Keurig Dr Pepper's cash ratio has experienced fluctuations, with the lowest value of 0.03 in 2023 and the highest of 0.09 in 2021. A low cash ratio may suggest limited cash reserves to meet short-term obligations.
Overall, while the current, quick, and cash ratios of Keurig Dr Pepper Inc have shown some improvements and fluctuations over the five-year period, the ratios remain relatively low, indicating potential liquidity challenges in meeting short-term obligations with available current assets, excluding inventory, and cash reserves. The company may need to closely monitor its liquidity position and consider strategies to strengthen its short-term financial health.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -5.61 | -34.94 | -69.20 | -82.32 | -73.00 |
The cash conversion cycle of Keurig Dr Pepper Inc has demonstrated a notable improvement over the years. In December 31, 2020, the company had a negative cash conversion cycle of -73.00 days, indicating a quicker conversion of inventory into cash. This efficiency further improved in December 31, 2021, with a cash conversion cycle of -82.32 days, showcasing enhanced management of receivables and payables.
By December 31, 2022, the company managed to further optimize its cash flow cycle, reaching a cycle of -69.20 days. This trend continued into December 31, 2023, with a significantly reduced cycle of -34.94 days, showcasing the company's continued focus on effective working capital management.
Most recently, by December 31, 2024, Keurig Dr Pepper Inc has achieved an exceptionally low cash conversion cycle of -5.61 days, indicating a highly efficient process of converting its resources into cash. This improvement signifies the company's ability to effectively manage its cash flow, inventory, and credit terms, ultimately enhancing its overall liquidity position.