3M Company (MMM)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.41 | 1.07 | 1.54 | 1.70 | 1.89 |
| Quick ratio | 0.97 | 0.70 | 0.88 | 1.04 | 1.23 |
| Cash ratio | 0.69 | 0.39 | 0.41 | 0.53 | 0.63 |
Based on the provided data, 3M Company's liquidity ratios have shown a declining trend over the years.
1. Current Ratio: The current ratio decreased from 1.89 in 2020 to 1.41 in 2024. This indicates a gradual decline in the company's ability to meet its short-term obligations with its current assets.
2. Quick Ratio: The quick ratio also showed a decrease from 1.23 in 2020 to 0.97 in 2024. This implies that 3M Company's ability to cover its immediate liabilities with its most liquid assets has weakened over time.
3. Cash Ratio: The cash ratio declined from 0.63 in 2020 to 0.69 in 2024. Although the cash ratio increased slightly in 2024, it remained below the 2020 level, suggesting a constrained ability to settle short-term liabilities solely with cash.
Overall, the liquidity position of 3M Company has deteriorated as indicated by the decreasing trend in all three liquidity ratios. It is important for the company to closely monitor its liquidity position and take necessary measures to ensure it has adequate resources to meet its short-term obligations.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 73.66 | 98.90 | 89.87 | 86.77 | 90.24 |
The cash conversion cycle of 3M Company has been fluctuating over the years, with a slight decrease from 90.24 days in December 2020 to 86.77 days in December 2021. However, the cycle increased to 89.87 days in December 2022 and further to 98.90 days in December 2023. Notably, there was a significant improvement in the cycle, dropping to 73.66 days by December 2024.
Overall, the company's cash conversion cycle indicates the average number of days it takes to convert its resources invested in inventory and accounts receivable into cash inflows. The fluctuations in the cycle suggest varying efficiency levels in managing inventory, receivables, and payables. The decreasing trend from 2020 to 2021 and the substantial improvement in 2024 reflect potential enhancements in working capital management and operational effectiveness. It is essential for 3M to continue monitoring and optimizing its cash conversion cycle to ensure effective cash flow management and sustainable business operations.