Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
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Liquidity Ratios (Summary)
Applied Materials Inc., liquidity ratios
| Oct 27, 2024 | Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|---|
| Current ratio | |||||||
| Quick ratio | |||||||
| Cash ratio |
Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).
- Current Ratio
- The current ratio demonstrated fluctuations over the analyzed periods. It initially increased from 2.3 in 2019 to a peak of 3.0 in 2020, indicating improved short-term liquidity. However, in the following years, it declined to 2.54 in 2021 and further to 2.16 in 2022, suggesting a reduction in the buffer available to cover current liabilities. The ratio rebounded to 2.6 in 2023 and slightly decreased to 2.51 in 2024, which still reflects a relatively stable liquidity position above the 2.0 threshold.
- Quick Ratio
- The quick ratio followed a somewhat similar trend but with more pronounced variation. Starting at 1.38 in 2019, it increased significantly in 2020 to 1.95, implying enhanced liquidity excluding inventory. The ratio declined to 1.64 in 2021 and fell sharply to 1.17 in 2022, indicating reduced liquidity in more liquid assets during that period. Recovery occurred in the subsequent years with the ratio rising to 1.63 in 2023 and further to 1.74 in 2024, demonstrating strengthening quick asset availability relative to current liabilities.
- Cash Ratio
- The cash ratio exhibited considerable volatility. It rose from 0.81 in 2019 to 1.29 in 2020, reflecting increased cash or cash equivalents relative to current liabilities. This ratio then decreased to 0.86 in 2021 and sharply dropped to a low of 0.35 in 2022, signaling a significant decline in the company's most liquid assets during that year. Subsequent recovery was notable, with the cash ratio improving to 0.93 in 2023 and 1.12 in 2024, indicating a restoration of cash reserves relative to short-term obligations.
- Summary
- Overall, liquidity ratios revealed a pronounced peak in 2020 followed by a dip primarily in 2022 across all metrics, before a recovery trend in the last two years. The current and quick ratios remained above 1.0 throughout the period, suggesting the company maintained the ability to meet short-term liabilities. However, the substantial drop in the cash ratio in 2022 points to a temporary reduction in highly liquid assets, which was subsequently addressed. These trends may reflect shifting working capital management and cash flow dynamics over the years.
Current Ratio
Applied Materials Inc., current ratio calculation, comparison to benchmarks
| Oct 27, 2024 | Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current assets | |||||||
| Current liabilities | |||||||
| Liquidity Ratio | |||||||
| Current ratio1 | |||||||
| Benchmarks | |||||||
| Current Ratio, Competitors2 | |||||||
| Advanced Micro Devices Inc. | |||||||
| Analog Devices Inc. | |||||||
| Broadcom Inc. | |||||||
| Intel Corp. | |||||||
| KLA Corp. | |||||||
| Lam Research Corp. | |||||||
| Micron Technology Inc. | |||||||
| NVIDIA Corp. | |||||||
| Qualcomm Inc. | |||||||
| Texas Instruments Inc. | |||||||
| Current Ratio, Sector | |||||||
| Semiconductors & Semiconductor Equipment | |||||||
| Current Ratio, Industry | |||||||
| Information Technology | |||||||
Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).
1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- The current assets of the company show a consistent upward trend over the analyzed periods. Starting at $10,206 million in 2019, the value increased significantly to $21,220 million by 2024, indicating a doubling of current assets over five years. There was a notable rise from 2022 to 2023, where current assets increased from $15,925 million to $19,147 million, followed by a continued increase to $21,220 million in 2024.
- Current Liabilities
- Current liabilities have also shown an increasing trend, albeit at a more moderate pace compared to current assets. Beginning at $4,447 million in 2019, liabilities rose steadily each year, reaching $8,468 million by 2024. The most significant increases occurred between 2020 and 2022, where liabilities increased from $4,459 million to $7,379 million, remaining relatively stable in 2023 before rising again in 2024.
- Current Ratio
- The current ratio experienced fluctuations during the period but remained above 2.0 throughout. It peaked at 3.0 in 2020, indicating strong liquidity at that time, then decreased to 2.16 in 2022, suggesting a slight reduction in liquidity. The ratio rebounded to 2.6 in 2023 and slightly decreased to 2.51 in 2024. Overall, the current ratio indicates the company maintained a healthy ability to cover short-term liabilities with current assets despite some variability.
- Summary
- The financial data demonstrates a positive growth trajectory in current assets, supported by a gradual rise in current liabilities. Liquidity, as measured by the current ratio, showed some volatility but remained solid, consistently above the threshold of 2. This suggests prudent management of short-term financial obligations and an overall strengthening of the company’s short-term financial position over the years.
Quick Ratio
Applied Materials Inc., quick ratio calculation, comparison to benchmarks
| Oct 27, 2024 | Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Cash and cash equivalents | |||||||
| Short-term investments | |||||||
| Accounts receivable, net | |||||||
| Total quick assets | |||||||
| Current liabilities | |||||||
| Liquidity Ratio | |||||||
| Quick ratio1 | |||||||
| Benchmarks | |||||||
| Quick Ratio, Competitors2 | |||||||
| Advanced Micro Devices Inc. | |||||||
| Analog Devices Inc. | |||||||
| Broadcom Inc. | |||||||
| Intel Corp. | |||||||
| KLA Corp. | |||||||
| Lam Research Corp. | |||||||
| Micron Technology Inc. | |||||||
| NVIDIA Corp. | |||||||
| Qualcomm Inc. | |||||||
| Texas Instruments Inc. | |||||||
| Quick Ratio, Sector | |||||||
| Semiconductors & Semiconductor Equipment | |||||||
| Quick Ratio, Industry | |||||||
| Information Technology | |||||||
Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).
1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total Quick Assets
- The total quick assets showed a notable upward trend over the analyzed periods. Starting at 6,151 million USD in late 2019, the figure increased sharply to 8,701 million USD by late 2020. This growth continued more moderately through 2021, reaching 10,412 million USD. A temporary decline occurred in 2022 with assets decreasing to 8,649 million USD, followed by a strong recovery and growth in 2023 and 2024, climbing to 12,034 million USD and then 14,705 million USD respectively. Overall, the total quick assets exhibited significant growth with a minor fluctuation in 2022.
- Current Liabilities
- Current liabilities displayed a more gradual but consistent increase over the timeframe. Beginning at 4,447 million USD in late 2019, liabilities remained relatively flat into 2020 at 4,459 million USD. However, from 2021 onward, current liabilities rose steadily to 6,344 million USD, then 7,379 million USD in 2022, showing a slight dip to 7,372 million USD in 2023, before increasing again to 8,468 million USD by 2024. This trend indicates progressively growing short-term obligations that may impact liquidity considerations.
- Quick Ratio
- The quick ratio's movements reflected a fluctuating liquidity position throughout the years. The ratio increased from 1.38 in 2019 to a peak of 1.95 in 2020, suggesting improved immediate liquidity relative to current liabilities. However, it declined to 1.64 in 2021 and dropped more sharply to 1.17 in 2022, indicating a weakening in liquidity during that period. The ratio rebounded to 1.63 in 2023 and continued upward to 1.74 in 2024, signaling a recovery and strengthening of liquid asset coverage over current liabilities. Despite temporary decreases, the overall pattern points to a generally sound liquidity position improving towards the end of the period.
Cash Ratio
Applied Materials Inc., cash ratio calculation, comparison to benchmarks
| Oct 27, 2024 | Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Cash and cash equivalents | |||||||
| Short-term investments | |||||||
| Total cash assets | |||||||
| Current liabilities | |||||||
| Liquidity Ratio | |||||||
| Cash ratio1 | |||||||
| Benchmarks | |||||||
| Cash Ratio, Competitors2 | |||||||
| Advanced Micro Devices Inc. | |||||||
| Analog Devices Inc. | |||||||
| Broadcom Inc. | |||||||
| Intel Corp. | |||||||
| KLA Corp. | |||||||
| Lam Research Corp. | |||||||
| Micron Technology Inc. | |||||||
| NVIDIA Corp. | |||||||
| Qualcomm Inc. | |||||||
| Texas Instruments Inc. | |||||||
| Cash Ratio, Sector | |||||||
| Semiconductors & Semiconductor Equipment | |||||||
| Cash Ratio, Industry | |||||||
| Information Technology | |||||||
Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).
1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets exhibited fluctuations over the examined period. From 2019 to 2020, there was a significant increase from 3,618 million US dollars to 5,738 million US dollars. However, the subsequent year saw a moderate decline to 5,459 million US dollars. In 2022, cash assets dropped sharply to 2,581 million US dollars, representing the lowest point during this timeframe. Following this decline, there was a substantial recovery with cash assets rising to 6,869 million US dollars in 2023 and further increasing to 9,471 million US dollars in 2024.
- Current Liabilities
- Current liabilities displayed an overall upward trend, beginning at 4,447 million US dollars in 2019 and moving slightly higher to 4,459 million US dollars in 2020. The liabilities rose sharply in 2021 to 6,344 million US dollars and continued to increase through 2022 and 2023, stabilizing around 7,372-7,379 million US dollars. In 2024, current liabilities again increased, reaching 8,468 million US dollars, the highest in the series.
- Cash Ratio
- The cash ratio, which measures liquidity by comparing cash assets to current liabilities, showed considerable volatility. It increased notably from 0.81 in 2019 to 1.29 in 2020, indicating improved liquidity. However, it declined to 0.86 in 2021 and reached a low point of 0.35 in 2022, signifying a substantially weaker liquidity position relative to current liabilities. After this decline, the cash ratio rebounded to 0.93 in 2023 and further improved to 1.12 in 2024, suggesting a strengthened liquidity position going forward.
- Summary Insights
- The data reveals cyclical fluctuations in cash assets and liquidity over the six-year period, with a marked dip around 2022 followed by a recovery through 2024. Current liabilities consistently increased, which exerted pressure on liquidity as indicated by the cash ratio's fluctuations. The recovery in cash assets in the last two years helped the company regain a cash ratio above 1.0 by 2024, improving short-term financial stability despite ongoing growth in liabilities.