Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
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- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Operating Profit Margin since 2012
- Return on Equity (ROE) since 2012
- Total Asset Turnover since 2012
- Price to Book Value (P/BV) since 2012
- Analysis of Debt
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Liquidity Ratios (Summary)
Kraft Foods Group Inc., liquidity ratios
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
- Current Ratio
- The current ratio exhibited a decrease over the three-year period. It started at 1.34 in 2012, increased slightly to 1.44 in 2013, but then declined significantly to 1.00 by the end of 2014. This suggests a diminishing ability to cover short-term liabilities with current assets, which may indicate tighter liquidity management or increased short-term obligations in 2014.
- Quick Ratio
- The quick ratio showed a similar pattern, beginning at 0.65 in 2012 and improving to 0.80 in 2013, before falling to 0.50 in 2014. As the quick ratio excludes inventory from current assets, this decline in 2014 reflects a reduced buffer of liquid assets relative to current liabilities, reinforcing the observation of declining short-term liquidity during that year.
- Cash Ratio
- The cash ratio followed the overall downward trend in liquidity ratios. It rose from 0.35 in 2012 to 0.49 in 2013, indicating an improved capacity to meet short-term liabilities with cash and cash equivalents. However, in 2014, the ratio dropped markedly to 0.27, signaling a significant reduction in the most liquid assets available to the company at year-end.
- Summary of Liquidity Trends
- Across all three measured liquidity ratios, there was an improvement from 2012 to 2013, followed by a notable decline in 2014. This pattern may reflect changes in working capital management, operational cash flows, or an increase in current liabilities in 2014. The substantial decrease in liquidity metrics in 2014 warrants further investigation to identify underlying causes and assess potential impacts on the company's short-term financial stability.
Current Ratio
Kraft Foods Group Inc., current ratio calculation, comparison to benchmarks
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Current assets | ||||
| Current liabilities | ||||
| Liquidity Ratio | ||||
| Current ratio1 | ||||
| Benchmarks | ||||
| Current Ratio, Competitors2 | ||||
| lululemon athletica inc. | ||||
| Nike Inc. | ||||
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 2014 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- Current assets showed a slight increase from 4,823 million US dollars in 2012 to 4,908 million in 2013. However, in 2014, there was a marginal decline to 4,791 million US dollars, indicating a somewhat stable but slightly declining trend towards the end of the period.
- Current Liabilities
- Current liabilities decreased from 3,606 million US dollars in 2012 to 3,410 million in 2013, suggesting an improvement in short-term obligations. However, a significant increase occurred in 2014, rising sharply to 4,773 million US dollars, signaling heightened short-term financial obligations during that year.
- Current Ratio
- The current ratio improved from 1.34 in 2012 to 1.44 in 2013, indicating an enhanced ability to cover short-term liabilities with current assets. This positive liquidity trend reversed in 2014, as the ratio fell to 1.00, reflecting a decreased liquidity position and potential challenges in meeting short-term obligations.
Quick Ratio
Kraft Foods Group Inc., quick ratio calculation, comparison to benchmarks
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Cash and cash equivalents | ||||
| Receivables, net of allowances | ||||
| Total quick assets | ||||
| Current liabilities | ||||
| Liquidity Ratio | ||||
| Quick ratio1 | ||||
| Benchmarks | ||||
| Quick Ratio, Competitors2 | ||||
| lululemon athletica inc. | ||||
| Nike Inc. | ||||
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 2014 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets showed an increase from 2344 million US dollars in 2012 to 2734 million US dollars in 2013, representing a growth phase. However, in 2014, there was a noticeable decline to 2373 million US dollars, nearly reverting to the 2012 level.
- Current liabilities
- Current liabilities decreased from 3606 million US dollars in 2012 to 3410 million US dollars in 2013, indicating some improvement in short-term obligations. Nevertheless, in 2014, current liabilities surged significantly to 4773 million US dollars, marking a considerable increase compared to the previous years.
- Quick ratio
- The quick ratio improved from 0.65 in 2012 to 0.8 in 2013, suggesting enhanced short-term liquidity and a stronger ability to meet immediate liabilities without relying on inventory. However, in 2014, the quick ratio fell sharply to 0.5, reflecting a deterioration in liquidity and potential challenges in covering current liabilities with quick assets.
Cash Ratio
Kraft Foods Group Inc., cash ratio calculation, comparison to benchmarks
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Cash and cash equivalents | ||||
| Total cash assets | ||||
| Current liabilities | ||||
| Liquidity Ratio | ||||
| Cash ratio1 | ||||
| Benchmarks | ||||
| Cash Ratio, Competitors2 | ||||
| lululemon athletica inc. | ||||
| Nike Inc. | ||||
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 2014 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total cash assets
- The total cash assets exhibited variability over the three-year period. There was an increase from $1,255 million at the end of 2012 to $1,686 million at the end of 2013, indicating improved liquidity or cash generation during that year. However, the value declined in 2014 to $1,293 million, suggesting a reduction in cash reserves possibly due to higher expenditures or investments.
- Current liabilities
- Current liabilities demonstrated a fluctuating but overall upward trend. Initially, liabilities decreased slightly from $3,606 million in 2012 to $3,410 million in 2013, indicating perhaps some short-term debt repayment or reduction in obligations. Subsequently, there was a significant increase to $4,773 million in 2014, which might reflect increased short-term borrowings or other current obligations.
- Cash ratio
- The cash ratio, defined as cash and cash equivalents divided by current liabilities, showed considerable variation. It improved from 0.35 in 2012 to 0.49 in 2013, reflecting stronger liquidity relative to current liabilities. However, in 2014, the cash ratio declined sharply to 0.27, indicating a weakened liquidity position with less cash available to cover short-term liabilities.