The Coca-Cola Company (KO)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.13 | 1.14 | 1.14 | 1.15 | 1.15 | 1.13 | 1.13 | 1.18 | 1.13 | 1.52 | 1.47 | 1.33 | 1.32 | 1.13 | 1.09 | 0.87 | 0.76 | 0.92 | 0.83 | 1.02 |
| Quick ratio | 0.67 | 0.73 | 0.76 | 0.76 | 0.71 | 0.71 | 0.47 | 0.45 | 0.72 | 0.82 | 0.74 | 0.63 | 0.80 | 0.84 | 0.80 | 0.61 | 0.44 | 0.55 | 0.48 | 0.39 |
| Cash ratio | 0.52 | 0.58 | 0.60 | 0.56 | 0.54 | 0.52 | 0.47 | 0.45 | 0.55 | 0.82 | 0.74 | 0.63 | 0.59 | 0.70 | 0.66 | 0.47 | 0.29 | 0.38 | 0.32 | 0.26 |
The liquidity ratios of Coca-Cola Co over the past eight quarters provide insights into the company's ability to meet its short-term obligations and manage its current assets effectively.
1. Current Ratio: The current ratio measures the company's ability to cover its short-term liabilities with its current assets. In this case, the current ratio has remained relatively stable around 1.13 to 1.15 over the quarters, indicating that Coca-Cola Co has been able to meet its short-term obligations. However, the ratio is slightly below the ideal value of 2, suggesting a potential risk in the company's liquidity position.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Coca-Cola Co's quick ratio has ranged from 0.93 to 0.98 during the same period. The trend indicates a similar picture to the current ratio, highlighting a consistent ability to meet short-term obligations, although slightly below the optimal level of 1.
3. Cash Ratio: The cash ratio focuses solely on the company's ability to cover its short-term liabilities with cash and cash equivalents. Coca-Cola Co's cash ratio has ranged from 0.73 to 0.82, with a fluctuating trend over the quarters. This ratio indicates the company's reliance on cash to meet its obligations, and the variations suggest potential shifts in cash management practices.
In summary, while Coca-Cola Co has demonstrated a consistent ability to meet its short-term obligations based on the current, quick, and cash ratios, the ratios consistently hover slightly below the ideal benchmarks. This suggests that while the company's liquidity position is generally stable, there may be room for improvement in managing current assets to enhance liquidity.
See also:
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 4.22 | 112.68 | 125.45 | 133.26 | -11.12 | 111.44 | 77.81 | 85.65 | -21.65 | 78.23 | 83.51 | 90.29 | -2.95 | 130.50 | 134.09 | 132.30 | 28.28 | 128.35 | 142.35 | 127.37 |
The cash conversion cycle of Coca-Cola Co has experienced significant fluctuations over the past eight quarters. In Q1 2023, the company's cash conversion cycle was at its shortest at 4.22 days, indicating efficient management of cash flows and working capital. However, this efficiency deteriorated in the subsequent quarters, with Q2 2023, Q3 2023, and Q4 2023 showing much longer cash conversion cycles of 125.45 days, 112.68 days, and 133.26 days, respectively.
Comparing these figures to the corresponding quarters in 2022, there is a noticeable increase in the cash conversion cycle, indicating potential challenges in managing working capital and cash flows effectively. In particular, Q1 2022 had a relatively short cash conversion cycle of 7.82 days, which contrasts sharply with the extended cycles observed in the same quarter in 2023.
Overall, these fluctuations suggest that Coca-Cola Co may be facing challenges in efficiently managing its operating cycle, which includes the time it takes to convert inventory and receivables into cash. It is important for the company to closely monitor and address these changes to ensure optimal use of its resources and maintain financial stability.