Mondelez International Inc (MDLZ)

Mondelez International Inc.'s liquidity ratios, including the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations and manage its current liabilities with available assets.

1. Current Ratio:
The current ratio measures the company's ability to pay off its short-term liabilities with its current assets. Mondelez's current ratio has shown some fluctuation over the past five years, ranging from 0.50 to 0.74. As of December 31, 2023, the current ratio stands at 0.62. This indicates that for every dollar of current liabilities, Mondelez has 0.62 dollars of current assets readily available to meet these obligations. While the current ratio has improved compared to the prior year, it still suggests that the company may face challenges in meeting its short-term financial commitments.

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. Mondelez's quick ratio has shown a similar pattern of fluctuation, with values ranging from 0.33 to 0.54 over the past five years. As of December 31, 2023, the quick ratio is 0.43. This implies that the company has 0.43 dollars of quick assets (such as cash, marketable securities) available to cover each dollar of current liabilities. While the quick ratio is higher than the current ratio, indicating a better ability to cover short-term obligations without relying on inventory, it still falls below the ideal benchmark of 1.

3. Cash Ratio:
The cash ratio specifically measures the company's ability to cover its current liabilities with cash and cash equivalents. Mondelez's cash ratio has also fluctuated over the past five years, ranging from 0.14 to 0.32. As of December 31, 2023, the cash ratio is 0.19. This implies that the company has 0.19 dollars of cash and cash equivalents for each dollar of current liabilities. While the cash ratio has improved compared to the prior year, it remains relatively low, indicating a potential vulnerability in meeting short-term obligations solely with cash resources.

In summary, Mondelez International Inc.'s liquidity ratios demonstrate some improvement in the company's ability to cover short-term obligations with available assets. However, the ratios still indicate a moderate level of liquidity risk, with room for further enhancement to strengthen the company's financial flexibility and resilience in managing its short-term financial obligations.

---

See also:

Mondelez International Inc Liquidity Ratios

---

Additional liquidity measure

Mondelez International Inc.'s cash conversion cycle has shown a fluctuating trend over the past five years. The company's cash conversion cycle improved significantly in 2023 compared to the previous year. As of December 31, 2023, Mondelez International Inc. has a negative cash conversion cycle of -31.47 days, indicating that the company is able to convert inventory into cash quickly.

A negative cash conversion cycle suggests that Mondelez International Inc. is efficiently managing its working capital. This means that the company is able to sell its inventory, collect receivables, and pay suppliers within a short period, resulting in a quicker turnover of cash.

Overall, the improvement in the cash conversion cycle from 2022 to 2023 reflects positively on Mondelez International Inc.'s operational efficiency and liquidity management. It indicates that the company is effectively managing its inventory, accounts receivable, and accounts payable to optimize its cash flow operations.