Procter & Gamble Company (PG)

The liquidity ratios of Procter & Gamble Company over the analyzed period from June 30, 2021, to June 30, 2025, demonstrate a pattern of fluctuations with a general trend toward stabilization in recent years.

The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, shows a decline from 0.70 in 2021 to a low of 0.63 in 2023. However, it exhibits a notable recovery to 0.73 in 2024 before slightly receding to 0.70 in 2025. Despite this rebound, the current ratios remain below the generally accepted benchmark of 1.0, indicating that at each point, current liabilities exceeded current assets, which could suggest a conservative or tight liquidity position.

The quick ratio, which refines the current ratio by excluding inventories and other less liquid current assets, follows a similar pattern. It declines from 0.45 in 2021 to 0.38 in 2023, signaling a limited capacity to cover short-term liabilities without liquidating inventories. The ratio improves to 0.46 in 2024 before decreasing slightly to 0.44 in 2025, yet it remains below the standard of 1.0, reflecting continued reliance on inventory and other less liquid assets to meet obligations.

The cash ratio, the most stringent liquidity measure indicating the company's ability to cover current liabilities with cash and cash equivalents, also trends downward initially from 0.31 in 2021 to 0.23 in 2023. It then increases modestly to 0.28 in 2024, followed by a slight decrease to 0.27 in 2025. Consistently below 0.3, this ratio underscores a relatively cautious liquidity stance, with a significant portion of short-term obligations not fully backed by cash holdings alone.

Overall, the analysis indicates that Procter & Gamble’s liquidity position has been relatively tight throughout the period, with ratios consistently below the ideal threshold of 1.0. The recent upward movements in 2024 suggest some improvement, but the ratios remain indicative of a cautious liquidity strategy, likely supported by strong operating cash flows and effective management of inventories and receivables to mitigate liquidity risks.

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See also:

Procter & Gamble Company Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle (CCC) of Procter & Gamble Company over the period from June 30, 2021, to June 30, 2025, exhibits a generally negative trend, indicating the company's efficiency in managing working capital and cash flows.

In detail, the CCC was recorded at -53.45 days on June 30, 2021, reflecting that the company was able to generate cash from operations approximately 53 days before settling its payables and receivables. Over the subsequent periods, the CCC experienced a gradual reduction in negativity, reaching -45.49 days as of June 30, 2022, and further improving to -39.88 days on June 30, 2023.

Between June 30, 2023, and June 30, 2024, the CCC slightly deteriorated to -48.02 days, before improving again to -41.28 days by June 30, 2025. Throughout this period, the cycle remains in negative territory, which is characteristic of a successful cash flow management strategy where the company effectively receives cash from sales prior to disbursing payments to suppliers.

The fluctuations in the CCC suggest periods of operational adjustments, possibly reflecting changes in inventory management, receivables collection efficiency, or payables policies. The negative CCC values across all surveyed years imply that Procter & Gamble consistently manages to operate with minimal net investment in working capital, often receiving cash before paying its suppliers, which enhances liquidity and reduces reliance on external financing.

Overall, the trend indicates a sustained ability to efficiently convert receivables and inventories into cash while delaying payments, although the slight variations may warrant ongoing attention to optimize cash flow further.