Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Broadcom Inc., liquidity ratios
Based on: 10-K (reporting date: 2024-11-03), 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: 2020-11-01), 10-K (reporting date: 2019-11-03).
- Current Ratio
- The current ratio exhibited an upward trend from 1.44 in 2019 to a peak of 2.82 in 2023, indicating an improvement in the company's ability to cover its short-term liabilities with short-term assets over this period. However, there was a significant decline in 2024, with the ratio dropping to 1.17, suggesting a reduced liquidity position compared to previous years.
- Quick Ratio
- The quick ratio followed a similar pattern to the current ratio. It increased steadily from 1.21 in 2019 to 2.34 in 2023. This ratio reflects the company's capacity to meet short-term obligations without relying on inventory. The ratio then decreased sharply to 0.82 in 2024, indicating a notable deterioration in liquidity excluding inventory.
- Cash Ratio
- The cash ratio showed consistent growth from 0.73 in 2019 to 1.92 in 2023, demonstrating increasing cash and cash equivalents relative to current liabilities. Despite this positive trend, the cash ratio fell substantially to 0.56 in 2024, pointing to a considerable reduction in the company's most liquid assets relative to current liabilities.
- Overall Insights
- Over the six-year period, liquidity ratios improved markedly from 2019 through 2023, reflecting strengthening short-term financial health. The sharp declines observed in all liquidity measures in 2024 may indicate a change in asset composition, increased current liabilities, or a strategic decision impacting cash reserves and liquid assets. This shift warrants further investigation into operational or financial activities during the latest period to understand the underlying causes.
Current Ratio
Broadcom Inc., current ratio calculation, comparison to benchmarks
| Nov 3, 2024 | Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Nov 1, 2020 | Nov 3, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current assets | 19,595) | 20,847) | 18,504) | 16,586) | 11,895) | 9,917) | |
| Current liabilities | 16,697) | 7,405) | 7,052) | 6,281) | 6,371) | 6,899) | |
| Liquidity Ratio | |||||||
| Current ratio1 | 1.17 | 2.82 | 2.62 | 2.64 | 1.87 | 1.44 | |
| Benchmarks | |||||||
| Current Ratio, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 2.62 | 2.51 | 2.36 | 2.02 | 2.54 | — | |
| Analog Devices Inc. | 1.84 | 1.37 | 2.02 | 1.94 | 1.84 | 1.32 | |
| Applied Materials Inc. | 2.51 | 2.60 | 2.16 | 2.54 | 3.00 | 2.30 | |
| Intel Corp. | 1.33 | 1.54 | 1.57 | 2.10 | 1.91 | — | |
| KLA Corp. | 2.15 | 2.24 | 2.50 | 2.71 | 2.78 | — | |
| Lam Research Corp. | 2.97 | 3.16 | 2.69 | 3.30 | 3.43 | 3.61 | |
| Micron Technology Inc. | 2.64 | 4.46 | 2.89 | 3.10 | 2.71 | 2.58 | |
| NVIDIA Corp. | 4.17 | 3.52 | 6.65 | 4.09 | 7.67 | — | |
| Qualcomm Inc. | 2.40 | 2.33 | 1.75 | 1.68 | 2.14 | 1.88 | |
| Texas Instruments Inc. | 4.12 | 4.55 | 4.70 | 5.33 | 4.28 | — | |
| Current Ratio, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 2.14 | 2.45 | 2.34 | 2.47 | 2.47 | — | |
| Current Ratio, Industry | |||||||
| Information Technology | 1.24 | 1.41 | 1.37 | 1.55 | 1.71 | — | |
Based on: 10-K (reporting date: 2024-11-03), 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: 2020-11-01), 10-K (reporting date: 2019-11-03).
1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= 19,595 ÷ 16,697 = 1.17
2 Click competitor name to see calculations.
- Current Assets
- The current assets consistently increased from 2019 through 2023, rising from 9,917 million US dollars to a peak of 20,847 million US dollars. However, there is a slight decline observed in 2024, where current assets decreased to 19,595 million US dollars. This indicates a general upward trend in liquidity resources over the period, with a minor reversal in the most recent year.
- Current Liabilities
- Current liabilities exhibited a fluctuating pattern. Starting at 6,899 million US dollars in 2019, they decreased gradually until 2021, reaching 6,281 million US dollars. Subsequently, liabilities increased in 2022 and 2023 to 7,052 and 7,405 million US dollars, respectively, followed by a sharp rise in 2024 to 16,697 million US dollars. This sharp increase in the latest year represents a significant shift in short-term obligations.
- Current Ratio
- The current ratio improved steadily from 2019 (1.44) to 2023 (2.82), suggesting an increasing ability to cover short-term liabilities with short-term assets over this period. However, in 2024, the ratio experienced a notable decline to 1.17, reflecting the surge in current liabilities alongside the slight fall in current assets. This decline may indicate a reduced short-term liquidity position in the most recent year compared to the prior upward trend.
Quick Ratio
Broadcom Inc., quick ratio calculation, comparison to benchmarks
| Nov 3, 2024 | Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Nov 1, 2020 | Nov 3, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Cash and cash equivalents | 9,348) | 14,189) | 12,416) | 12,163) | 7,618) | 5,055) | |
| Trade accounts receivable, net | 4,416) | 3,154) | 2,958) | 2,071) | 2,297) | 3,259) | |
| Total quick assets | 13,764) | 17,343) | 15,374) | 14,234) | 9,915) | 8,314) | |
| Current liabilities | 16,697) | 7,405) | 7,052) | 6,281) | 6,371) | 6,899) | |
| Liquidity Ratio | |||||||
| Quick ratio1 | 0.82 | 2.34 | 2.18 | 2.27 | 1.56 | 1.21 | |
| Benchmarks | |||||||
| Quick Ratio, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 1.66 | 1.67 | 1.57 | 1.49 | 1.81 | — | |
| Analog Devices Inc. | 1.24 | 0.76 | 1.34 | 1.24 | 1.31 | 0.85 | |
| Applied Materials Inc. | 1.74 | 1.63 | 1.17 | 1.64 | 1.95 | 1.38 | |
| Intel Corp. | 0.72 | 1.01 | 1.01 | 1.38 | 1.24 | — | |
| KLA Corp. | 1.36 | 1.33 | 1.57 | 1.81 | 1.82 | — | |
| Lam Research Corp. | 1.93 | 1.95 | 1.72 | 2.11 | 2.22 | 2.16 | |
| Micron Technology Inc. | 1.59 | 2.53 | 1.92 | 2.17 | 1.82 | 1.74 | |
| NVIDIA Corp. | 3.38 | 2.61 | 5.96 | 3.56 | 7.04 | — | |
| Qualcomm Inc. | 1.64 | 1.51 | 1.01 | 1.34 | 1.75 | 1.65 | |
| Texas Instruments Inc. | 2.55 | 3.12 | 3.67 | 4.45 | 3.34 | — | |
| Quick Ratio, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 1.42 | 1.63 | 1.62 | 1.79 | 1.78 | — | |
| Quick Ratio, Industry | |||||||
| Information Technology | 0.96 | 1.12 | 1.09 | 1.30 | 1.47 | — | |
Based on: 10-K (reporting date: 2024-11-03), 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: 2020-11-01), 10-K (reporting date: 2019-11-03).
1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 13,764 ÷ 16,697 = 0.82
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets show an overall upward trend from 2019 through 2023, increasing from 8,314 million US dollars in 2019 to a peak of 17,343 million US dollars in 2023. However, there is a noticeable decline in 2024, where the value decreases to 13,764 million US dollars. This indicates growth in liquid assets over the five-year period, followed by a significant reduction in the most recent year.
- Current liabilities
- Current liabilities generally remained stable between 2019 and 2023, fluctuating moderately between 6,281 million and 7,405 million US dollars. In 2024, current liabilities sharply increase to 16,697 million US dollars, more than doubling the previous year’s value. This indicates a substantial rise in short-term obligations in the last period.
- Quick ratio
- The quick ratio improved consistently from 1.21 in 2019 to a high of 2.34 in 2023, reflecting enhanced short-term liquidity and a greater ability to meet current liabilities with liquid assets. However, in 2024, there is a significant decline in the quick ratio to 0.82, falling below 1.0. This suggests a deterioration in liquidity position, as the company’s liquid assets are insufficient to cover current liabilities in that period.
- Summary of trends
- Between 2019 and 2023, the company demonstrated strong growth in liquid assets alongside steady current liabilities, resulting in improving liquidity as evidenced by the rising quick ratio. The sharp changes in 2024—specifically the decline in total quick assets coupled with a marked increase in current liabilities—lead to a deteriorated liquidity position. The quick ratio below 1 in 2024 indicates potential liquidity risk or increased short-term financial pressure during that year.
Cash Ratio
Broadcom Inc., cash ratio calculation, comparison to benchmarks
| Nov 3, 2024 | Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Nov 1, 2020 | Nov 3, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Cash and cash equivalents | 9,348) | 14,189) | 12,416) | 12,163) | 7,618) | 5,055) | |
| Total cash assets | 9,348) | 14,189) | 12,416) | 12,163) | 7,618) | 5,055) | |
| Current liabilities | 16,697) | 7,405) | 7,052) | 6,281) | 6,371) | 6,899) | |
| Liquidity Ratio | |||||||
| Cash ratio1 | 0.56 | 1.92 | 1.76 | 1.94 | 1.20 | 0.73 | |
| Benchmarks | |||||||
| Cash Ratio, Competitors2 | |||||||
| Advanced Micro Devices Inc. | 0.70 | 0.86 | 0.92 | 0.85 | 0.95 | — | |
| Analog Devices Inc. | 0.79 | 0.30 | 0.60 | 0.71 | 0.77 | 0.43 | |
| Applied Materials Inc. | 1.12 | 0.93 | 0.35 | 0.86 | 1.29 | 0.81 | |
| Intel Corp. | 0.62 | 0.89 | 0.88 | 1.03 | 0.97 | — | |
| KLA Corp. | 0.97 | 0.87 | 0.94 | 1.19 | 1.17 | — | |
| Lam Research Corp. | 1.35 | 1.28 | 0.77 | 1.25 | 1.55 | 1.54 | |
| Micron Technology Inc. | 0.88 | 2.01 | 1.24 | 1.34 | 1.23 | 1.24 | |
| NVIDIA Corp. | 2.44 | 2.03 | 4.89 | 2.95 | 6.11 | — | |
| Qualcomm Inc. | 1.27 | 1.18 | 0.54 | 1.04 | 1.29 | 1.37 | |
| Texas Instruments Inc. | 2.08 | 2.58 | 3.04 | 3.79 | 2.75 | — | |
| Cash Ratio, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 1.00 | 1.23 | 1.15 | 1.30 | 1.32 | — | |
| Cash Ratio, Industry | |||||||
| Information Technology | 0.57 | 0.71 | 0.67 | 0.89 | 1.06 | — | |
Based on: 10-K (reporting date: 2024-11-03), 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: 2020-11-01), 10-K (reporting date: 2019-11-03).
1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 9,348 ÷ 16,697 = 0.56
2 Click competitor name to see calculations.
The analysis of the financial data over the six-year period reveals notable variations in the company's liquidity and short-term obligations.
- Total cash assets
- The total cash assets showed a consistent upward trend from 2019 through 2023, increasing from $5,055 million to a peak of $14,189 million. This represents almost a threefold growth across four years, suggesting a strong accumulation of cash reserves. However, in 2024, there was a significant decline to $9,348 million, indicating a reduction of approximately 34% from the prior year.
- Current liabilities
- The current liabilities exhibited minor fluctuations from 2019 to 2023, starting at $6,899 million in 2019 and gradually rising to $7,405 million in 2023. These increments were relatively moderate. However, in 2024, current liabilities surged dramatically to $16,697 million, more than doubling compared to the previous year. This sudden increase in obligations could have implications for short-term liquidity management.
- Cash ratio
- The cash ratio, representing the company's ability to cover current liabilities with cash assets, improved steadily from 0.73 in 2019 to 1.92 in 2023, exceeding the critical threshold of 1.0 and indicating robust liquidity over this period. Nonetheless, in 2024, the cash ratio dropped sharply to 0.56, falling below 1.0 and suggesting potential challenges in meeting immediate liabilities solely with cash reserves.
In summary, the data points to a period of strengthening liquidity and cash accumulation until 2023, followed by a sharp downturn in 2024 characterized by reduced cash assets and significantly increased current liabilities. This combination resulted in a marked decline in the cash ratio, signaling a potential liquidity risk that may warrant further investigation into the company’s short-term financial strategy and operational factors influencing these changes.