3M Company (MMM)
Quick ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 5,600,000 | 5,933,000 | 3,655,000 | 4,564,000 | 4,634,000 |
| Short-term investments | US$ in thousands | 2,128,000 | 53,000 | 238,000 | 201,000 | 404,000 |
| Receivables | US$ in thousands | 3,194,000 | 4,750,000 | 4,532,000 | 4,660,000 | 4,705,000 |
| Total current liabilities | US$ in thousands | 11,256,000 | 15,297,000 | 9,523,000 | 9,035,000 | 7,948,000 |
| Quick ratio | 0.97 | 0.70 | 0.88 | 1.04 | 1.23 |
December 31, 2024 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($5,600,000K
+ $2,128,000K
+ $3,194,000K)
÷ $11,256,000K
= 0.97
The quick ratio of 3M Company has shown a declining trend over the past five years, indicating a potential issue with its short-term liquidity position. In December 2020, the quick ratio was at a healthy 1.23, suggesting that the company had $1.23 in liquid assets available to cover each dollar of current liabilities. However, by the end of December 2024, the quick ratio had decreased to 0.97, reflecting a decrease in the company's ability to meet its short-term obligations with its most liquid assets.
The significant drop in the quick ratio from 2020 to 2024, from 1.23 to 0.97, may raise concerns about 3M Company's liquidity management. A quick ratio below 1 indicates that the company may have difficulty meeting its short-term liabilities using only its most liquid assets, such as cash and accounts receivable, without relying on selling inventory or obtaining additional financing.
It is important for stakeholders to closely monitor 3M Company's liquidity position and management strategies to ensure it can meet its short-term obligations effectively. Further analysis and investigation into the underlying reasons for the declining quick ratio would be beneficial to assess the company's financial health accurately.
Peer comparison
Dec 31, 2024