Advanced Micro Devices Inc. (NASDAQ:AMD)

The analysis of the liquidity ratios over the given periods reveals several notable trends and fluctuations in the company's short-term financial health.

Current Ratio

The current ratio displays a generally stable to improving trend with some variations. Starting at 2.21 in March 2020, it experienced a slight decrease to 2.02 in December 2021, indicating a temporary dip in short-term liquidity. Subsequently, the ratio improved steadily, peaking at 2.82 in September 2024, before slightly declining to 2.49 by June 2025. Overall, this suggests the company maintained a healthy level of current assets relative to current liabilities, with enhanced liquidity towards the later periods.

Quick Ratio

The quick ratio, which excludes inventories from current assets, follows a somewhat similar pattern but shows more pronounced volatility. The ratio increased from 1.55 in March 2020 to a peak of 2.01 in June 2021, indicating strengthening liquidity excluding inventory. However, it then declined to 1.40 by July 2023, suggesting fluctuating liquid asset management. After a rebound to 1.79 in September 2024, the ratio fell to a low of 1.12 in June 2025. These swings imply variable availability of liquid current assets, possibly reflecting inventory adjustments or changes in receivables or payables management.

Cash Ratio

The cash ratio exhibits the greatest variability among the three liquidity measures. Starting at 0.70 in March 2020, it increased significantly to 1.31 in June 2021, reflecting a strong cash position in relation to current liabilities at that time. Afterwards, it generally declined with intermittent recoveries, reaching a low of 0.60 in June 2025. The downward trend in later periods indicates a reduction in highly liquid cash or cash equivalents relative to short-term obligations, which could raise concerns about the company's ability to cover immediate liabilities purely with cash.

In summary, the company’s liquidity position has remained solid overall, with current assets consistently exceeding current liabilities by over twice the amount. However, the declining trend in the quick and cash ratios toward the most recent periods suggests a reduction in readily available liquid assets excluding inventory. This may warrant closer monitoring of cash management and liquidity risk to ensure short-term obligations can be comfortably met without reliance on inventory sales or other less liquid assets.

The analysis of the quarterly financial data indicates an overall growth in current assets over the period observed. Starting from approximately $4.39 billion in March 2020, current assets show a steady upward trend, reaching about $24.52 billion by June 2025. This substantial increase suggests a strengthening of the company's short-term liquidity position and asset base.

Current liabilities also demonstrate an upward trend but with more fluctuations compared to current assets. Beginning at approximately $1.99 billion in March 2020, current liabilities rise steadily with some variation, reaching nearly $9.84 billion by June 2025. Although liabilities have increased substantially, the pace appears somewhat slower than the growth in current assets, which may suggest improved liquidity management or increased operational scale.

The current ratio, which measures the company's ability to cover short-term obligations with short-term assets, remains consistently above 2.0 throughout the period, indicating a strong liquidity position. The ratio fluctuates between a low of approximately 2.0 and a high near 2.82, with notable peaks occurring towards the end of 2023 and mid-2024. This stability in the current ratio, alongside growing assets and liabilities, reflects a balanced approach to managing working capital.

Overall, the company shows improving liquidity with increasingly larger pools of current assets relative to current liabilities. The consistent current ratio above the 2.0 mark over multiple years is a positive indicator of the company's ability to meet short-term obligations. Despite the increase in liabilities, the proportional growth in assets suggests healthy financial management and operational expansion during the observed timeframe.

Current Assets

Demonstrates sustained growth from $4.39 billion in Mar 2020 to $24.52 billion in Jun 2025, indicating an expanding asset base and improved liquidity.

Current Liabilities

Increases from $1.99 billion to $9.84 billion across the same period, showing growing obligations but at a pace that maintains liquidity balance.

Current Ratio

Remains consistently above 2.0, fluctuating between 2.0 and 2.82, reinforcing the company's strong short-term financial health.

Quick Assets Trend

The total quick assets demonstrate a general upward trend from March 2020 to June 2025, increasing from approximately $3.1 billion to around $11 billion. This growth is accompanied by fluctuations, including a notable rise to over $10 billion in early 2022, followed by some variability in subsequent quarters. Overall, the asset base shows robustness with peaks and troughs indicating periods of asset accumulation and moderate declines.

Current Liabilities Trend

Current liabilities have steadily increased over the analyzed periods, starting from about $2 billion in early 2020 and reaching peaks above $9.8 billion in mid-2025. The trend shows consistent growth with occasional short-term decreases but maintains an upward trajectory. This rising liability pattern suggests increased short-term obligations that parallel the growth in quick assets.

Quick Ratio Analysis

The quick ratio, which measures liquidity by comparing quick assets to current liabilities, displays considerable variability across the periods. Beginning with a ratio of 1.55 in early 2020, it experiences fluctuations, peaking above 2.0 in mid-2021 and dropping to a low near 1.12 by mid-2025. The ratio generally remains above 1.0 throughout the timeline, indicating that quick assets consistently cover current liabilities, though the declining trend towards the end suggests a diminishing liquidity cushion.

Overall Liquidity and Financial Health

While quick assets have grown substantially, current liabilities have increased at a comparable or faster rate, resulting in a decreasing quick ratio in the later periods. The initial periods reflect strong liquidity positions, but the declining ratio towards mid-2025 may indicate increased financial pressure. The company appears to maintain adequate liquidity overall but should monitor the narrowing margin between assets and liabilities to avoid potential liquidity risks.

Total Cash Assets

The total cash assets exhibit a generally upward trend from March 2020 through March 2025, starting at $1,385 million and reaching as high as $7,310 million in June 2025. There are noticeable fluctuations, such as a peak in March 2022 at $6,532 million, followed by a decline through December 2023, where it bottoms around $5,132 million. After this dip, cash assets again increase sharply in mid-2025.

Current Liabilities

Current liabilities steadily increase over the observed period, beginning at $1,985 million in March 2020 and rising consistently with some volatility to reach $9,843 million by June 2025. Notable surges occur around early 2022, where liabilities jump above $5,500 million, and another acceleration is visible starting mid-2024 through mid-2025, indicating growing short-term financial obligations.

Cash Ratio

The cash ratio, representing liquidity measured as cash assets relative to current liabilities, fluctuates throughout the period. It starts below 1.0 at 0.7 in March 2020, peaks above 1.3 in June 2021, and then oscillates largely below 1.0 during subsequent years. The lowest observed values are around 0.6 in mid-2025, suggesting a potential reduction in liquidity relative to short-term obligations. Although some recovery occurs intermittently, the ratio does not maintain levels indicative of strong liquidity after early 2022.

Overall Financial Position Insights

While cash assets have generally trended upward, the significantly faster growth in current liabilities is exerting pressure on liquidity ratios. The decline in the cash ratio below 1.0 for extended periods indicates that the company may have faced increasing challenges in covering short-term liabilities with cash alone. The periodic decreases in total cash assets, combined with steadily increasing liabilities, highlight potential volatility and risks in working capital management over the analyzed quarters.