The Coca-Cola Company (KO)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.03 | 1.13 | 1.15 | 1.13 | 1.32 |
| Quick ratio | 0.51 | 0.58 | 0.59 | 0.63 | 0.75 |
| Cash ratio | 0.51 | 0.58 | 0.59 | 0.63 | 0.75 |
The current ratio for The Coca-Cola Company has decreased from 1.32 in 2020 to 1.03 in 2024. This indicates a decrease in the company's short-term liquidity position, as the current assets are no longer sufficiently covering the current liabilities.
Similarly, the quick ratio has also decreased from 0.75 in 2020 to 0.51 in 2024. This signifies a decline in the company's ability to meet its short-term obligations using its most liquid assets, such as cash and equivalents, without relying on inventory.
The cash ratio, which represents the most stringent liquidity measure, has also shown a downward trend from 0.75 in 2020 to 0.51 in 2024. This suggests that The Coca-Cola Company's cash and cash equivalents may not be adequate to cover its current liabilities alone, raising concerns about its ability to meet short-term financial obligations solely from available cash resources.
Overall, the decreasing trend in all three liquidity ratios over the years points towards a potential liquidity challenge for The Coca-Cola Company, as its ability to meet short-term obligations with liquid assets has weakened. This may require the company to closely monitor its cash flow management and possibly take actions to improve its liquidity position in the future.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 94.18 | 87.19 | 85.84 | 81.14 | 88.74 |
The cash conversion cycle of The Coca-Cola Company has fluctuated over the past five years according to the provided data. As of December 31, 2020, the company's cash conversion cycle was 88.74 days, indicating that it took the company approximately 88.74 days to convert its investments in inventory and other resources back into cash.
By the end of 2021, the cash conversion cycle had decreased to 81.14 days, which suggests that the company improved its efficiency in managing its working capital and converting assets into cash more quickly.
In 2022, the cash conversion cycle increased slightly to 85.84 days, indicating a slight delay in converting resources to cash compared to the previous year. Similarly, by December 31, 2023, the cash conversion cycle was 87.19 days, showing a continued but marginal increase in the time taken to convert investments back into cash.
The most recent data for December 31, 2024, shows a further increase in the cash conversion cycle to 94.18 days. This suggests that The Coca-Cola Company may be facing challenges in efficiently managing its working capital and converting assets into cash within a shorter timeframe.
Overall, the trend in the cash conversion cycle of The Coca-Cola Company over the past five years indicates some fluctuations, with periods of improvement in efficiency followed by slight delays in converting assets to cash. Monitoring and managing the cash conversion cycle is crucial for the company to optimize its working capital and ensure liquidity in its operations.