Broadcom Inc. (NASDAQ:AVGO)

The analysis of liquidity ratios over the reported periods reveals distinct phases in the company's short-term financial health. Initially, the current ratio exhibits a general upward trend from January 2021 through October 2023, indicating improving ability to cover short-term liabilities with current assets. This ratio reaches a peak around October 2023 before experiencing a marked decline starting in February 2024, continuing through mid-2025, though it begins to show signs of recovery towards the latest dates.

The quick ratio follows a similar trajectory to the current ratio. It improves steadily until October 2023, demonstrating an increased capacity to meet immediate obligations without relying on inventory. Beginning February 2024, the quick ratio declines considerably, dropping below 1.0 in several periods, which may imply tighter liquidity conditions. However, it also shows a tendency to recover by the later observed dates.

The cash ratio, representing the most conservative liquidity measure, also rises consistently from early 2021 to late 2023. This increase points to growing cash and cash equivalents relative to current liabilities, reinforcing strong liquidity. After reaching its maximum around October 2023, it experiences a substantial reduction during 2024 and into 2025, dipping below 0.6 in many periods. The ratio suggests less cash buffer relative to current liabilities during this time frame, albeit with slight improvement in the latter periods.

Current Ratio

Shows robust growth from 2.14 to a high of approximately 2.82 by October 2023, indicating enhanced overall liquidity. The subsequent decline to levels around or below 1.17 by early 2025 denotes a weakening in current asset coverage. A modest rebound emerging towards mid to late 2025 suggests some stabilization.

Quick Ratio

Improves from 1.80 to about 2.34 by late 2023, reflecting a strong position excluding inventory. A downturn follows, with values falling below 1.0 from early 2024 through mid-2025, signaling potential liquidity tightness. Recovery trends appear near the end of the period.

Cash Ratio

Increases from 1.43 to nearly 1.92 by October 2023, highlighting ample cash reserves relative to liabilities. The ratio then declines sharply to levels below 0.6 in 2024-2025, indicating lesser cash availability to cover short-term obligations. Slight improvement is noted towards the last dates.

Overall, the liquidity ratios depict a period of strengthening short-term financial position through late 2023, followed by a noticeable contraction in liquidity beginning in early 2024. This pattern suggests changing operational or financial conditions that reduce liquid asset coverage. The partial recovery in the most recent periods may indicate corrective measures or improved cash flow management.

The quarterly financial data reveals notable fluctuations in Broadcom Inc.'s liquidity position over the observed periods.

Current Assets

The current assets display a general upward trend, increasing from approximately $14,300 million at the beginning of 2021 to a peak of about $27,192 million in early 2024. Following this peak, there is some volatility with values declining to around $19,595 million by late 2024, then steadily rising again to reach $31,573 million by late 2025. This overall increase indicates an expanding base of assets readily convertible to cash or used within a year.

Current Liabilities

Current liabilities exhibit a less consistent pattern. Starting at roughly $6,694 million in early 2021, the values remain relatively stable, oscillating around the $6,200 to $7,500 million range through early 2023. A substantial surge is then observed beginning in early 2024, with current liabilities skyrocketing to over $20,369 million, maintaining elevated levels through 2025 before slightly decreasing to $18,514 million by the end of the period. This sharp increase suggests potential increases in short-term obligations or changes in financial structuring.

Current Ratio

The current ratio remains comfortably above 2.0 from early 2021 through late 2023, indicating strong liquidity and an ability to cover short-term liabilities over twice with current assets. However, a striking drop occurs in early 2024, with the ratio falling below 1.5, reaching as low as 1.0 in some quarters of 2024 and 2025. This shift implies a considerable decline in liquidity, likely driven by the pronounced increase in current liabilities relative to current assets during the same period. Slight recoveries in the ratio toward late 2025 suggest some improvement but remain below prior high levels.

Overall, the data indicates a period of strong liquidity through 2023, followed by a significant decline starting in early 2024 due to a rapid increase in current liabilities outpacing growth in current assets. This pattern could reflect strategic shifts in working capital management, increased short-term borrowing, or other operational changes impacting the company’s short-term financial stability.

The analysis of the quarterly financial data reveals notable fluctuations in liquidity and short-term financial stability indicators over the observed periods. The key focus is on total quick assets, current liabilities, and the derived quick ratio, which measures the company's ability to cover its current liabilities with its most liquid assets.

Total Quick Assets

Total quick assets exhibited a generally increasing trend from early 2021 through late 2023, starting at approximately $12.1 billion and rising to over $17.3 billion. This indicates a strengthening in liquid asset holdings available to meet short-term obligations. However, from early 2024 onward, assets displayed some volatility with declines followed by occasional recoveries, culminating in a significant jump to $23.3 billion by the end of the final period in late 2025. This sharp increase may suggest either asset accumulation strategies or changes in asset classification.

Current Liabilities

Current liabilities remained relatively stable through 2021 and 2022, fluctuating modestly around $6.3 billion to $7.5 billion. Notably, starting from early 2024, current liabilities spiked dramatically to over $20 billion for several consecutive quarters before declining somewhat toward late 2025. This pronounced increase indicates a substantial rise in short-term obligations, posing increased liquidity demands.

Quick Ratio

The quick ratio was robust and above 1.7 for the majority of the period between 2021 and 2023, peaking at 2.34, which signifies a strong liquidity position with quick assets more than sufficient to cover current liabilities. Nonetheless, the ratio sharply declined below 1.0 starting early 2024, reaching a low of 0.68, indicating a weakening liquidity condition where current liabilities exceeded readily available assets. Toward late 2025, the quick ratio improved but remained closer to 1.0, suggesting cautious recovery in liquidity status though still below historic levels.

Overall, the data outlines a stable and healthy liquidity profile through 2023 with significant challenges beginning in early 2024, marked by a surge in current liabilities and a corresponding drop in the quick ratio. The subsequent partial recovery of liquidity ratios by the end of the period suggests interventions or structural adjustments aimed at restoring balance between liquid assets and short-term liabilities.

The analysis of the data reveals several notable trends in the company's liquidity and working capital management over the recorded periods.

Total Cash Assets

Total cash assets displayed fluctuation throughout the periods, beginning at approximately $9.55 billion and showing a general upward movement with intermittent declines. After peaking near $14.19 billion in late 2023, cash assets declined towards the mid-to-late 2024 periods, followed by a notable increase at the end of the timeline, reaching $16.18 billion. This suggests variability in cash management, with periods of cash accumulation as well as utilization or reduction.

Current Liabilities

Current liabilities exhibited an overall increasing trend, beginning around $6.69 billion and rising steadily with some volatility. A significant jump is observed starting early 2024, where liabilities unexpectedly surged to over $20 billion, maintaining elevated levels through the subsequent periods, with slight declines towards the end but still markedly higher than prior years. This sharp increase indicates a substantial change in short-term obligations and possibly borrowing or payables accumulation during 2024.

Cash Ratio

The cash ratio initially remained above 1.0, indicating a strong liquidity position wherein the company’s cash assets were sufficient to cover current liabilities, reaching a high around 1.94 in late 2021. However, beginning in early 2024, the ratio dropped drastically below 1.0, reaching lows around 0.45 to 0.58, signaling that cash holdings no longer fully covered current liabilities during this period. Although there was a slight recovery to 0.87 by late 2025, the ratio remained well below earlier levels. This decline suggests a shift in liquidity management, potentially signaling increased use of cash for operations, investments, or debt repayments, and a relatively higher reliance on other current asset forms or financing.

In summary, the company showed robust liquidity with cash assets comfortably covering short-term obligations up to late 2023. Starting early 2024, a marked increase in current liabilities coupled with relatively lower cash ratios reflects a significant change in the company’s liquidity dynamics. This could be indicative of strategic financial decisions or operational shifts that led to elevated liabilities and a reduced cash cushion. The recovery trend toward the end of the observed periods points to efforts to improve liquidity, although not to previous levels. Monitoring the relationship between cash assets and current liabilities will be crucial for assessing future liquidity risk and operational flexibility.