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Liquidity Analysis

Difficulty level: Basic

Liquidity ratios measure the company's ability to meet its short-term obligations.


Ratios (Summary)

Alcoa Inc., liquidity ratios

 
Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008
Current ratio 1.30 1.28 1.31 1.30 1.12
Quick ratio 0.61 0.65 0.66 0.68 0.46
Cash ratio 0.31 0.32 0.29 0.27 0.10

Source: Based on data from Alcoa Inc. Annual Reports

Ratio Description The company
Current ratio A liquidity ratio calculated as current assets divided by current liabilities. Alcoa Inc.'s current ratio deteriorated from 2010 to 2011 but then slightly improved from 2011 to 2012.
Quick ratio A liquidity ratio calculated as (cash plus short-term marketable investments plus receivables) divided by current liabilities. Alcoa Inc.'s quick ratio deteriorated from 2010 to 2011 and from 2011 to 2012.
Cash ratio A liquidity ratio calculated as (cash plus short-term marketable investments) divided by current liabilities. Alcoa Inc.'s cash ratio improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012.

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Current Ratio

Alcoa Inc., current ratio calculation, comparison to benchmarks

 
Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008
Selected Financial Data (USD $ in millions)
Current assets 7,700  7,713  6,869  7,022  8,150 
Current liabilities 5,942  6,013  5,236  5,414  7,279 
Ratio
Current ratio1 1.30 1.28 1.31 1.30 1.12
Benchmarks
Current Ratio, Industry
Basic Materials 1.95 1.86 1.90 1.70

Source: Based on data from Alcoa Inc. Annual Reports

2012 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= 7,700 ÷ 5,942 = 1.30

Ratio Description The company
Current ratio A liquidity ratio calculated as current assets divided by current liabilities. Alcoa Inc.'s current ratio deteriorated from 2010 to 2011 but then slightly improved from 2011 to 2012.

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Quick Ratio

Alcoa Inc., quick ratio calculation, comparison to benchmarks

 
Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008
Selected Financial Data (USD $ in millions)
Cash and cash equivalents 1,861  1,939  1,543  1,481  762 
Receivables from customers, less allowances 1,399  1,571  1,565  1,529  1,883 
Other receivables 340  371  326  653  708 
Total quick assets 3,600  3,881  3,434  3,663  3,353 
Current liabilities 5,942  6,013  5,236  5,414  7,279 
Ratio
Quick ratio1 0.61 0.65 0.66 0.68 0.46
Benchmarks
Quick Ratio, Industry
Basic Materials 1.05 1.07 1.25 1.07

Source: Based on data from Alcoa Inc. Annual Reports

2012 Calculations

1 Quick ratio = Total quick assets ÷ Current liabilities
= 3,600 ÷ 5,942 = 0.61

Ratio Description The company
Quick ratio A liquidity ratio calculated as (cash plus short-term marketable investments plus receivables) divided by current liabilities. Alcoa Inc.'s quick ratio deteriorated from 2010 to 2011 and from 2011 to 2012.

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Cash Ratio

Alcoa Inc., cash ratio calculation, comparison to benchmarks

 
Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008
Selected Financial Data (USD $ in millions)
Cash and cash equivalents 1,861  1,939  1,543  1,481  762 
Total cash assets 1,861  1,939  1,543  1,481  762 
Current liabilities 5,942  6,013  5,236  5,414  7,279 
Ratio
Cash ratio1 0.31 0.32 0.29 0.27 0.10
Benchmarks
Cash Ratio, Industry
Basic Materials 0.43 0.44 0.60 0.43

Source: Based on data from Alcoa Inc. Annual Reports

2012 Calculations

1 Cash ratio = Total cash assets ÷ Current liabilities
= 1,861 ÷ 5,942 = 0.31

Ratio Description The company
Cash ratio A liquidity ratio calculated as (cash plus short-term marketable investments) divided by current liabilities. Alcoa Inc.'s cash ratio improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012.

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