Charter Communications Inc. (NASDAQ:CHTR)

The analysis of the liquidity ratios over the reported quarters reveals several consistent patterns and fluctuations. The current ratio demonstrates overall modest variability, generally remaining below 0.6 throughout the period, indicating a relatively limited cushion of current assets over current liabilities. From early 2019 to the end of 2023, the current ratio shows episodes of slight improvement, such as an increase from 0.28 in September 2019 to 0.52 in December 2019, followed by a decline and stabilization around the low 0.3 range during the last year.

The quick ratio follows a similar trajectory to the current ratio but with consistently lower values, as expected due to the exclusion of inventories from current assets. Notably, this ratio also peaked at 0.46 in December 2019, mirroring the current ratio’s peak, before trending downward and stabilizing in the 0.28 to 0.3 range in the most recent quarters. This indicates that the quick assets, primarily cash and receivables, remain a limited portion of current liabilities but maintain a certain consistency over the years.

The cash ratio remains the lowest among the three liquidity measures, reflecting the proportion of cash and cash equivalents relative to current liabilities. Early in the period, it was especially low, reaching a minimum of 0.04 in September 2019 and September 2021. Although there were occasional slight increases, such as reaching 0.28 in December 2019 and 0.23 in June 2020, the general trend is subdued. In the most recent quarters, it consistently hovers around 0.04 to 0.05, suggesting the company maintains minimal cash reserves relative to its short-term obligations.

In summary, the liquidity position reflected by these ratios indicates a pattern of limited short-term asset coverage of current liabilities, with some temporary improvements but an overall stable and relatively low liquidity buffer across the entire timeframe. This persistent low liquidity could reflect a strategic choice or operational characteristic but may warrant attention regarding the company's ability to meet short-term obligations without reliance on asset liquidation or financing.

Current Ratio

Exhibits modest variation, peaking near 0.52 and stabilizing around 0.3 in recent quarters, indicating limited current asset coverage of short-term liabilities.

Quick Ratio

Consistently lower than the current ratio, with similar trend patterns; recent stability near 0.28-0.3 suggests conservative liquidity excluding inventory.

Cash Ratio

Lowest liquidity indicator, fluctuating between 0.04 and 0.28, commonly near 0.04-0.05 in later periods, revealing minimal cash reserves relative to current liabilities.

Current assets

The current assets exhibit fluctuations throughout the observed period. Initially, from March 2019 to December 2019, there is an upward movement, peaking at 6471 million US dollars by the end of 2019. However, this value declines during 2020, reaching a low around December 2020. Subsequent quarters in 2021 show volatility with a dip and partial recovery, while from early 2022 onwards, current assets demonstrate relative stability with slight increases, ending near 4132 million US dollars in December 2023.

Current liabilities

Current liabilities display a general upward trend overall, starting from 11950 million US dollars in March 2019, but with considerable volatility. There is a significant drop in mid-2020 to around 9142 million US dollars, followed by a rise and fluctuations across 2021 and 2022. By the end of 2023, current liabilities increase to 13214 million US dollars, the highest point in the entire dataset, indicating rising short-term obligations.

Current ratio

The current ratio remains consistently below 1 throughout the period, illustrating a persistently weak liquidity position. Early in 2019, values hover between 0.28 and 0.34, before a marked improvement to 0.52 at the end of 2019 and mid-2020. Following this peak, the ratio declines sharply, fluctuating mostly between 0.29 and 0.40 in subsequent quarters. The latter part of the dataset shows stabilization around 0.31 to 0.33, confirming limited short-term financial flexibility.

Trend in Total Quick Assets

The total quick assets show significant fluctuations throughout the observed period. Initially, from March 2019 to December 2019, there is a general increasing trend with a notable peak at the end of 2019. Following this peak, the quick assets decreased sharply in 2020, particularly in the first three quarters, before slightly recovering towards the end of that year. During 2021, the quick assets experienced variability but remained within a moderate range without establishing a clear increasing or decreasing trajectory. The first quarter of 2022 showed an increase reaching a level comparable to the end of 2019. In the subsequent quarters of 2022 and through 2023, quick assets stabilized somewhat but showed minor fluctuations without a distinct upward or downward trend.

Trend in Current Liabilities

Current liabilities exhibit some volatility but generally follow an increasing pattern over the full period. From early 2019 through early 2020, liabilities fluctuate but tend to ascend, reaching a peak in the first quarter of 2020. Mid-2020 shows a drop in liabilities, followed again by periodic rises and falls throughout 2021. Starting in early 2022 and continuing through 2023, current liabilities mostly trend upward, ending at higher levels compared to the start of the period, suggesting growing short-term obligations.

Analysis of Quick Ratio

The quick ratio remains consistently below 0.5 across all quarters, indicating that the company maintains quick assets substantially lower than its current liabilities throughout the period. There is a brief improvement towards the end of 2019 and mid-2020, where the ratio rises to approximately 0.45, but this level is not sustained. After mid-2020, the quick ratio generally stabilizes around 0.28 to 0.32 with minor oscillations, signaling limited changes in the company's short-term liquidity relative to its current liabilities. The persistently low quick ratio indicates that despite fluctuations in quick assets and liabilities, liquidity constraints may be a consistent aspect of the financial position.

Overall Insights

The financial data reveal a company managing variations in liquid assets and obligations amid an environment of overall increasing current liabilities. Although quick assets experience periods of improvement, the relative increase in current liabilities results in a consistently low quick ratio. This pattern suggests a cautious stance with respect to liquidity, potentially relying on other asset types or financing sources outside of quick assets to meet short-term obligations. Monitoring this ratio remains important as further decreases or stagnation could impact the company's ability to cover immediate liabilities without selling inventory or securing additional financing.

The financial data indicates fluctuation in total cash assets over the analyzed periods. Initially, total cash assets decreased from $1,451 million at the end of March 2019 to a low of $508 million by September 2019, followed by a significant increase to $3,483 million at the end of December 2019. Subsequently, the cash assets showed a downward trend, declining steadily through 2020 and 2021, reaching a low point around $466 million in September 2021. In 2022, cash levels remained relatively low, with small fluctuations, and ended 2022 around $645 million. The first three quarters of 2023 show a generally stable cash position, ranging between $478 million and $571 million, with a slight uptick to $709 million by December 2023.

Current liabilities exhibit notable variation as well. Beginning at $11,950 million in March 2019, the liabilities decreased to $9,875 million in June 2019 but generally increased over the subsequent years. There was a peak at $13,215 million in March 2020, followed by a decrease during mid-2020, although the overall trend across the period is upward. By the end of December 2023, current liabilities reached $13,214 million, nearing the highest levels seen in the dataset.

The cash ratio, defined as total cash assets divided by current liabilities, reflects the company's short-term liquidity position and shows a generally low value throughout the period, indicating limited cash coverage for current liabilities. Notably, there are some temporary improvements, such as the increase to 0.28 at the end of December 2019, coinciding with a peak in cash assets. However, following this peak, the cash ratio decreased again and stayed mostly below 0.10 from late 2020 through 2023.

Overall, the data suggests that while there was a significant increase in cash assets during the latter part of 2019, cash reserves have since declined and stabilized at relatively low levels compared to liabilities. The company continues to carry high current liabilities, and the low cash ratio highlights potential liquidity constraints and limited cash buffer to immediately cover short-term obligations. These trends may warrant attention to cash management and working capital strategies to ensure sufficient liquidity moving forward.

Total cash assets

Displayed significant volatility with a major peak at the end of 2019, followed by a prolonged period of lower cash balances through 2023.

Current liabilities

Show an overall increasing trend, with periodic fluctuations, reaching near peak levels at the end of 2023.

Cash ratio

Remained consistently low, suggesting concentrated risk regarding liquidity and limited cash coverage of current liabilities, except for a temporary improvement at the end of 2019.