Broadcom Inc. (NASDAQ:AVGO)

The analysis of the annual financial data reveals notable fluctuations and trends in current assets, current liabilities, and the current ratio over the observed periods.

Current Assets

Current assets exhibit an overall increasing trend from 864 million US dollars in 2009 to a peak of 20,847 million US dollars in 2023, followed by a slight decline to 19,595 million US dollars in 2024. There is significant growth especially from 2015 onwards, with a sharp increase between 2016 and 2017, where current assets more than doubled from 7,125 million to 15,823 million US dollars. This indicates increased liquidity and accumulation of short-term resources over the years.

Current Liabilities

Current liabilities show a more volatile pattern. They started at 633 million US dollars in 2009, fluctuated in the early years with a sharp rise from 2015 (1,119 million) to 2016 (3,078 million), and remained relatively high with some stabilization between 2,529 and 7,405 million US dollars until 2023. In 2024, current liabilities more than doubled to 16,697 million US dollars, indicating a substantial increase in short-term financial obligations in the most recent period.

Current Ratio

The current ratio, reflecting liquidity by comparing current assets to current liabilities, shows considerable variation. It improved markedly from 1.36 in 2009 to a high of 6.26 in 2017, suggesting very strong liquidity during this period. However, after 2017, the ratio declined significantly, reaching lows of 1.44 in 2019 and 1.17 in 2024. This decline implies a reduction in the company’s short-term financial cushion relative to its obligations in the later years, potentially indicating tighter liquidity conditions or increased reliance on short-term financing.

In summary, while current assets have grown substantially over the years, current liabilities have also increased sharply, especially in recent years. The liquidity, as measured by the current ratio, peaked around 2017 and has since declined, suggesting that despite increased assets, liabilities are growing at a higher pace, reducing the margin of liquidity safety. The significant rise in current liabilities in 2024 combined with a lower current ratio warrants attention regarding the company's short-term financial stability.