Meta Platforms Inc. (META)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 2.67 | 2.20 | 3.15 | 5.05 | 4.40 |
| Quick ratio | 2.55 | 2.01 | 2.94 | 4.89 | 4.28 |
| Cash ratio | 2.05 | 1.51 | 2.27 | 4.14 | 3.64 |
The liquidity ratios of Meta Platforms Inc have shown fluctuations over the past five years.
1. Current Ratio: This ratio indicates the company's ability to cover its short-term liabilities with its short-term assets. Meta Platforms Inc's current ratio has ranged from 2.20 to 5.05 over the last five years, with the highest being in 2020 and the lowest in 2022. A current ratio above 1 is generally considered healthy, and Meta Platforms Inc's current ratio has consistently been above this threshold, indicating that the company has sufficient current assets to meet its short-term obligations.
2. Quick Ratio: The quick ratio is a more stringent measure of liquidity as it excludes inventory from current assets. Meta Platforms Inc's quick ratio has mirrored its current ratio over the years, ranging from 2.20 to 5.05. This consistency suggests that the company has a strong ability to meet its short-term liabilities even when excluding inventory from its liquid assets.
3. Cash Ratio: The cash ratio specifically measures the company's ability to cover its current liabilities with its cash and cash equivalents. Meta Platforms Inc's cash ratio has varied from 1.71 to 4.29 throughout the period under review. The company's ability to maintain a cash ratio above 1 indicates that it has enough cash on hand to cover its immediate liabilities.
In summary, Meta Platforms Inc has demonstrated strong liquidity positions over the past five years, as evidenced by consistently healthy current, quick, and cash ratios. The company's ability to meet its short-term obligations and cover liabilities with its current assets, excluding inventory, and cash reserves is a positive indicator of its financial health and stability.
See also:
Meta Platforms Inc. Liquidity Ratios
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -36.30 | -46.04 | -39.24 | 19.10 | 10.27 |
The cash conversion cycle measures how efficiently a company manages its working capital by determining the time it takes to convert resources into cash inflows. Negative values indicate that Meta Platforms Inc has been able to effectively manage its working capital over the past five years.
In 2023, the cash conversion cycle improved significantly to -24.43 days from -29.99 days in 2022. This indicates that Meta Platforms Inc is now converting its resources into cash more efficiently compared to the previous year.
In 2021, the company also demonstrated improved efficiency with a cash conversion cycle of -22.35 days, a better performance compared to the 19.02 days in 2020. This suggests that Meta Platforms Inc has been managing its working capital more effectively during that period.
In contrast, in 2020, the company experienced a significant deterioration in its cash conversion cycle, with it increasing to 19.02 days from 10.18 days in 2019. This could be a signal that the company faced challenges in managing its working capital efficiently during that time.
Overall, the trend in Meta Platforms Inc's cash conversion cycle shows improvements in efficiency from 2019 to 2021, followed by a slight deterioration in 2022, before a significant improvement in 2023. This indicates that the company has been taking steps to manage its working capital effectively, although there have been some fluctuations in performance over the years.