Alphabet Inc. (NASDAQ:GOOG)

Current Ratio

The current ratio exhibits a steady declining trend over the reported periods, starting at 3.66 as of March 31, 2020, and gradually decreasing to 1.90 by December 31, 2025. The initial decline is relatively moderate from 3.66 to 2.93 through 2020 to 2021, followed by continuing reduction with a slight stabilization around 2.10 in early 2024. However, the downward trend resumes thereafter, reaching the lowest point near 1.77 in mid-2025 before a minor uptick to 1.90 at the end of 2025. This pattern indicates a gradual reduction in short-term liquidity and potentially reduced capacity to cover current liabilities with current assets.

Quick Ratio

The quick ratio follows a similar downward trajectory to the current ratio, indicating a reduction in more liquid current assets excluding inventories. Beginning at 3.46 in March 2020, the ratio declines steadily to 2.79 by December 2021, further decreasing to approximately 1.72 by December 2025. The consistency in decline suggests tightening liquidity excluding inventories, with the ratio showing no significant recovery phases and maintaining a generally steady decrease reflecting possible pressure on immediate liquid asset buffers over the long term.

Cash Ratio

The cash ratio shows the most pronounced decrease among the liquidity ratios, signifying a diminishing proportion of cash and cash equivalents to current liabilities. Starting at 2.92 in March 2020, the cash ratio declines steadily to 2.17 by the end of 2021, followed by a sharper fall to a value near 1.09 by the end of 2025. The ratio exhibits relatively smooth reduction with minor fluctuations, indicating a consistent decline in cash reserves relative to obligations. This trend points to a potentially tighter cash management position or increased short-term liabilities relative to cash holdings.

Overall Liquidity Insights

All three liquidity ratios display a clear and consistent downward trend over the observed five-year period. This overall pattern suggests a gradual diminishment in liquidity strength, potentially reflecting changes in working capital management, increased short-term liabilities, or strategic shifts in asset allocation. While the firm maintains ratios above 1.0 across all periods—indicating overall coverage of current liabilities—the declining trend may warrant closer monitoring to ensure ongoing sufficient liquidity and operational flexibility.

The analysis of the quarterly financial data reflects evolving liquidity trends over the examined periods. The current assets remained generally stable with fluctuations but showed a slight declining tendency in the latter quarters, moving from a high of 188,143 million US dollars in December 2021 to 162,216 million US dollars by June 2025.

Conversely, current liabilities exhibited an upward trend overall. Starting from 40,189 million US dollars in March 2020, current liabilities increased substantially, peaking near 91,654 million US dollars in June 2025. This consistent rise indicates growing short-term obligations.

The current ratio, which measures the ability to cover short-term liabilities with short-term assets, demonstrates a notable downward trend throughout the timeline. Beginning at a very strong level of 3.66 in March 2020, the ratio consistently decreased, reaching a low of 1.77 in March 2025, before slightly increasing to 1.90 in June 2025. This decline suggests a reduction in the margin of safety for meeting short-term liabilities.

The combination of relatively stable but slightly declining current assets and steadily increasing current liabilities results in this weakening liquidity position, implying potentially tighter short-term financial flexibility. The company’s liquidity management appears to be under increasing pressure, with the current ratio approaching levels closer to 1, which signals that current assets only marginally cover current liabilities by the latest quarters.

Current Assets

Relatively stable with slight decline in recent periods from 188,143M to 162,216M US dollars.

Current Liabilities

Consistent increase from 40,189M to 91,654M US dollars indicating rising short-term obligations.

Current Ratio

Progressive decrease from 3.66 to approximately 1.77, suggesting diminishing liquidity and margin of safety.

Total Quick Assets

The total quick assets demonstrate an overall decreasing trend from March 2020 through June 2025. Starting at approximately 139 billion USD in early 2020, the figure rises to a peak near 179 billion USD by December 2021. Following this peak, a steady decline occurs, with amounts reducing to around 150 billion USD by mid-2025. This pattern indicates an initial period of accumulation of liquid assets followed by a gradual reduction over subsequent years.

Current Liabilities

Current liabilities exhibit a generally upward trajectory during the analyzed period. Beginning at roughly 40 billion USD in early 2020, liabilities increase significantly, reaching over 64 billion USD by the end of 2021. The upward movement continues, peaking near 92 billion USD by mid-2025 before a slight decrease towards the latest quarter. This rise suggests growing short-term obligations that may reflect expanded operations or increased short-term financing.

Quick Ratio

The quick ratio displays a declining trend across the period. An initially high ratio of approximately 3.46 in March 2020 decreases progressively to below 2.0 by late 2023, and further drops to around 1.6 in late 2024. A minor recovery is noted in the last reported quarter with a ratio of around 1.72 in mid-2025. This decline reflects that quick assets are not keeping pace with rising current liabilities, indicating reduced short-term liquidity coverage over time.

Cash Assets Trend

Total cash assets showed an initial increase from March 2020 to December 2020, rising from approximately 117.2 billion to 136.7 billion US dollars. This peaked during the end of 2020 and early 2021, followed by some fluctuations but an overall downward trend through 2022 and into 2023. The values declined notably from 133.97 billion in March 2022 to approximately 110.9 billion by December 2023. This decline continued more markedly into 2024, with cash assets reaching a low near 93.2 billion in March 2024 before a slight recovery towards mid-2025, ending close to 95.1 billion US dollars. The data reflects a significant reduction in cash holdings over the five-year period analyzed.

Current Liabilities Trend

Current liabilities increased consistently over the time frame analyzed. Beginning at about 40.2 billion US dollars in March 2020, liabilities rose steadily, with some accelerated growth particularly noticeable from mid-2021 through late 2023. Liabilities peaked towards mid-2025 at approximately 91.65 billion US dollars. The rise in current liabilities contrasts with the decline in cash assets, indicating a growing short-term obligation burden relative to cash reserves.

Cash Ratio Development

The cash ratio, which measures the ability to cover current liabilities with cash assets, shows a clear declining trend throughout the analyzed periods. Starting at 2.92 in March 2020, the ratio steadily decreased, indicating that the cushion of cash relative to current liabilities is shrinking. By early 2022, the ratio dropped below 2.0 and continued to decline, reaching slightly above 1.0 by mid-2025. This signals that although cash is still sufficient to cover current liabilities, the margin of safety has considerably diminished compared to earlier periods.

Summary of Insights

The financial data highlight a pattern of decreasing liquidity over time, as evidenced by falling cash assets and a deteriorating cash ratio. Concurrently, current liabilities have expanded steadily, placing increasing pressure on the company's short-term financial stability. The narrowing gap between cash reserves and liabilities suggests more cautious liquidity management may be necessary to maintain financial flexibility.