3M Company (MMM)
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 | 1.41 | 1.43 | 1.36 | 1.64 | 1.07 | 1.05 | 1.44 | 1.42 | 1.54 | 1.56 | 1.47 | 1.58 | 1.70 | 1.70 | 1.73 | 1.83 | 1.89 | 1.90 | 1.94 | 1.65 |
| Quick ratio | 0.97 | 0.95 | 0.97 | 1.19 | 0.70 | 0.65 | 0.85 | 0.82 | 0.88 | 0.87 | 0.80 | 0.89 | 1.04 | 1.11 | 1.11 | 1.19 | 1.23 | 1.24 | 1.23 | 1.02 |
| Cash ratio | 0.69 | 0.64 | 0.72 | 0.83 | 0.39 | 0.34 | 0.39 | 0.38 | 0.41 | 0.38 | 0.30 | 0.37 | 0.53 | 0.60 | 0.58 | 0.61 | 0.63 | 0.62 | 0.61 | 0.49 |
3M Company's liquidity ratios paint a picture of its ability to meet short-term obligations and manage its current liabilities.
1. Current Ratio: The current ratio indicates the company's ability to cover its short-term obligations with its current assets. From March 31, 2020, to December 31, 2024, the current ratio fluctuated between 1.05 and 1.94. Although there was some volatility, the ratio generally remained above 1, suggesting that 3M had more than enough current assets to cover its current liabilities during this period. The ratio peaked at 1.94 on June 30, 2020, and experienced a decline to 1.05 on September 30, 2023, before recovering to 1.41 on December 31, 2024.
2. Quick Ratio: The quick ratio provides a more stringent measure of liquidity by excluding inventory from current assets. From March 31, 2020, to December 31, 2024, 3M's quick ratio ranged from 0.65 to 1.24. This ratio was generally lower than the current ratio, indicating that the company's ability to meet its short-term obligations without relying on inventory was more restricted. The quick ratio hit its lowest point at 0.65 on September 30, 2023, but later improved to 0.97 on December 31, 2024.
3. Cash Ratio: The cash ratio measures the company's ability to cover its current liabilities using only its cash and cash equivalents. Over the period from March 31, 2020, to December 31, 2024, 3M's cash ratio varied between 0.30 and 0.83. The cash ratio tends to be the lowest among the three liquidity ratios, reflecting the company's lower cash balance compared to total current liabilities. It peaked at 0.83 on March 31, 2024, indicating an increased ability to meet short-term debts with cash on hand.
In summary, 3M Company demonstrated overall stability in its liquidity position during the period analyzed, as evidenced by its current, quick, and cash ratios remaining at generally acceptable levels. However, there were some fluctuations, warranting ongoing monitoring to ensure the company's liquidity position remains robust.
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 | 73.66 | 86.40 | 84.41 | 108.36 | 92.11 | 104.80 | 100.59 | 92.40 | 89.87 | 97.73 | 95.59 | 90.38 | 86.77 | 92.02 | 91.34 | 91.69 | 90.24 | 92.40 | 100.64 | 97.72 |
The cash conversion cycle for 3M Company has fluctuated over the past few years, indicating changes in its efficiency in managing cash flow. From December 31, 2020, to September 30, 2021, there was a slight decrease in the cycle duration, implying improved efficiency in converting resources into cash. However, the cycle increased from September 2021 to June 2022, reaching the highest point in September 2022.
The company managed to decrease the cash conversion cycle in the following quarters, reaching a low point in December 31, 2024. This suggests that 3M improved its ability to convert inventory into sales and sales into cash during this period.
Overall, a lower cash conversion cycle indicates that 3M was able to more quickly convert its investments in inventory and other resources into cash inflows, thereby enhancing its liquidity and potentially improving its overall financial performance.