Altria Group (MO)

Liquidity ratios are important indicators of a company's ability to meet its short-term obligations. Altria Group Inc.'s liquidity ratios over the five-year period show fluctuations that are significant for analysis.

1. Current Ratio:
The current ratio measures the company's ability to cover its short-term liabilities with its current assets. A current ratio below 1 indicates potential difficulties in meeting current obligations. Altria Group Inc.'s current ratio has fluctuated over the years, reaching a low of 0.49 in 2023 and peaking at 0.84 in 2022. The decreasing trend from 2019 to 2023 raises concerns about the company's short-term liquidity position as current assets may not be sufficient to cover current liabilities.

2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. A quick ratio below 1 suggests that a company may struggle to meet its short-term obligations without relying on the sale of inventory. Altria Group Inc.'s quick ratio has followed a similar trend to the current ratio, with a low of 0.39 in 2023 and a high of 0.70 in 2022. The decreasing trend signals potential liquidity challenges, especially considering the low quick ratios in recent years.

3. Cash Ratio:
The cash ratio is the most conservative liquidity ratio, measuring a company's ability to cover current liabilities with only cash and cash equivalents. A cash ratio below 1 indicates that the company may have difficulty meeting its short-term obligations without relying on other current assets. Altria Group Inc.'s cash ratio has also exhibited a downward trend, reaching 0.38 in 2023 and 0.50 in 2022. The declining cash ratio highlights a potential risk in the company's ability to generate enough cash to meet immediate obligations.

In conclusion, based on the liquidity ratios of Altria Group Inc., there are concerns about the company's short-term liquidity position, as indicated by the declining trends in the current ratio, quick ratio, and cash ratio over the past five years. This suggests that the company may face challenges in meeting its short-term obligations without improving its liquidity management strategies or generating more cash inflows.

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See also:

Altria Group Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Altria Group Inc. has shown fluctuations over the past five years. In 2019, the company had a relatively high cash conversion cycle of 103.60 days, indicating a longer period between investing in the production of goods and receiving cash from their sale. This was then reduced to 75.96 days in 2020, suggesting an improvement in the efficiency of managing cash flows and working capital.

By 2021, the cash conversion cycle decreased further to 38.86 days, showcasing the company's ability to streamline operations and convert investments into cash more quickly. However, in 2022, there was a slight increase to 61.31 days, signifying a potential lag in cash conversion efficiency compared to the previous year.

The most recent data for 2023 indicates a return to a lower cash conversion cycle of 38.22 days, potentially reflecting renewed efforts by Altria Group Inc. to optimize working capital management and enhance cash flow operations.

Overall, the trend in the cash conversion cycle of Altria Group Inc. highlights the company's ongoing focus on improving operational efficiency and managing working capital effectively to shorten the time it takes to convert investments into cash.