Meta Platforms Inc. (META)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 2.98 | 2.73 | 2.83 | 2.68 | 2.67 | 2.57 | 2.32 | 2.07 | 2.20 | 2.57 | 2.52 | 2.81 | 3.15 | 4.23 | 5.43 | 6.08 | 5.05 | 5.51 | 6.02 | 4.60 |
| Quick ratio | 2.86 | 2.57 | 2.69 | 2.55 | 2.55 | 2.43 | 2.20 | 1.91 | 2.01 | 3.55 | 3.59 | 2.62 | 2.94 | 3.94 | 5.09 | 5.86 | 4.89 | 5.33 | 5.81 | 4.48 |
| Cash ratio | 2.35 | 2.13 | 2.15 | 2.07 | 2.05 | 2.00 | 1.79 | 1.48 | 1.51 | 3.05 | 3.07 | 2.08 | 2.27 | 3.26 | 4.31 | 5.05 | 4.14 | 4.66 | 5.15 | 4.00 |
Meta Platforms Inc.'s liquidity ratios have shown some fluctuations over the past few years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has been decreasing steadily from 6.02 in June 2020 to 2.98 in December 2024. This downward trend indicates a potential weakening ability to meet its short-term obligations.
The quick ratio, a more stringent measure of liquidity as it excludes inventory from current assets, also experienced a decline from 5.86 in March 2021 to 2.86 in December 2024. This trend suggests that the company's ability to meet its short-term liabilities with its most liquid assets has been diminishing.
Furthermore, the cash ratio, which specifically looks at the company's ability to cover its current liabilities with cash and cash equivalents, has followed a similar downward trend from 5.05 in March 2021 to 2.35 in December 2024. This indicates a reduction in the company's ability to settle its short-term obligations using its readily available cash resources.
In summary, Meta Platforms Inc.'s liquidity ratios have been declining over the past few years, signaling a potential deterioration in its short-term financial health and ability to meet its obligations as they come due. It is essential for the company to closely monitor its liquidity position and take necessary measures to improve its liquidity ratios for sustainable financial stability.
See also:
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -55.16 | -61.84 | -6.08 | -17.62 | -36.30 | -33.18 | -16.02 | -31.17 | -46.04 | -41.30 | -42.84 | -30.09 | -39.24 | -13.34 | 5.61 | 2.35 | 19.10 | 10.18 | 12.30 | 13.77 |
The cash conversion cycle is a metric that measures how long it takes for a company to convert its investments in inventory into cash flow from sales. A shorter cash conversion cycle indicates more efficient management of cash flows and working capital.
In the case of Meta Platforms Inc., the trend in the cash conversion cycle over the specified periods shows a significant improvement. The company's cash conversion cycle decreased from 13.77 days as of March 31, 2020, to negative days, indicating that Meta Platforms Inc. turned its investments in inventory into cash flow from sales more quickly than in the past.
The negative cash conversion cycle numbers from March 31, 2021, onwards may suggest that Meta Platforms Inc. has been able to collect cash from its sales more rapidly than it pays suppliers or holds inventory. This could be due to efficient inventory management, strong sales collection policies, and effective working capital management.
Overall, a negative cash conversion cycle for Meta Platforms Inc. implies that the company has been operating with strong cash flow efficiency, which could potentially lead to improved liquidity and profitability. It suggests that Meta Platforms Inc. is effectively managing its working capital and cash conversion processes, which is a positive indicator of its financial health and operational efficiency.