Analysis of Liquidity Ratios
Quarterly Data
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 (quarterly data)
Based on: 10-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30), 10-K (reporting date: 2012-12-29), 10-Q (reporting date: 2012-09-30), 10-12B/A (reporting date: 2012-06-30), 10-12B/A (reporting date: 2012-03-31).
The analysis of the liquidity ratios over the examined quarters reveals several key trends in the company's short-term financial health.
- Current Ratio
- The current ratio fluctuated moderately throughout the periods. Starting at 1.54 in the first quarter of 2012, it experienced a decline mid-year to 1.4 but then saw a rebound to 1.67 by the third quarter of 2013. After peaking, the ratio generally declined in the following quarters, reaching its lowest value of 1.00 in the fourth quarter of 2014. By the first quarter of 2015, the ratio slightly increased to 1.02. This trend indicates a general reduction in liquidity over time, implying a tightening in the coverage of current liabilities with current assets.
- Quick Ratio
- The quick ratio exhibited a gradual improvement from 0.48 at the start of 2012, increasing steadily to a peak of 0.81 around the third quarter of 2013. Subsequently, the ratio decreased to levels near 0.47 to 0.53 in 2014 and early 2015. This pattern shows that the company's ability to cover current liabilities with its most liquid assets improved initially but weakened in the later periods under review.
- Cash Ratio
- The cash ratio began at a baseline of zero at the start of 2012 and rose significantly to 0.35 by the first quarter of 2013. The ratio peaked at 0.49 in the fourth quarter of 2013 before experiencing a downward trend. By the last quarter of 2014 and into the first quarter of 2015, the cash ratio stabilized around 0.24 to 0.27, reflecting a reduction in immediate cash availability relative to current liabilities compared to the earlier peak period, though remaining above initial levels.
Overall, the liquidity position strengthened during the middle of the examined timeframe but weakened towards the end. Both the current and quick ratios declined after their peaks in 2013, signaling a decrease in the company's short-term asset coverage of liabilities. The cash ratio showed marked improvement early on and retained higher values than initial quarters despite the decline at the end. These patterns suggest a changing liquidity management strategy or operational shifts affecting asset composition over the analyzed periods.
Current Ratio
Kraft Foods Group Inc., current ratio calculation (quarterly data)
| Mar 28, 2015 | Dec 27, 2014 | Sep 27, 2014 | Jun 28, 2014 | Mar 29, 2014 | Dec 28, 2013 | Sep 28, 2013 | Jun 29, 2013 | Mar 30, 2013 | Dec 29, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 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-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30), 10-K (reporting date: 2012-12-29), 10-Q (reporting date: 2012-09-30), 10-12B/A (reporting date: 2012-06-30), 10-12B/A (reporting date: 2012-03-31).
1 Q1 2015 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the company's liquidity position over the periods presented.
- Current Assets
- Current assets exhibit a generally upward trend from March 31, 2012, to March 28, 2015. Beginning at $3,816 million, there is a gradual increase with some fluctuations, reaching $5,004 million by the last quarter. Notable rises occur between September 30, 2012, and December 29, 2012, and again between June 28, 2014, and March 28, 2015, indicating growth in the company's short-term resources available to meet immediate obligations.
- Current Liabilities
- Current liabilities fluctuate more significantly over the same period. Starting at $2,480 million in March 2012, liabilities rise sharply to $3,606 million by December 29, 2012. After some reduction in mid-2013, they spike again during the second and fourth quarters of 2014, peaking at $4,884 million in March 28, 2015. This increase in current liabilities towards the end of the timeframe suggests growing short-term obligations or increased operational expenditures.
- Current Ratio
- The current ratio shows considerable variation across quarters, indicating changes in the liquidity adequacy relative to current liabilities. Initially, the ratio decreases from 1.54 in March 2012 to a low of 1.34 in December 2012, implying a dip in liquidity. It subsequently recovers to a peak of 1.67 in September 2013, suggesting a strong liquidity position at that point. However, from June 28, 2014, onward, there is a consistent decline, reaching approximately 1.00 to 1.02 by March 28, 2015. This downward movement reflects a tightening liquidity situation, where current assets are roughly equal to current liabilities, potentially signaling reduced short-term financial flexibility.
In summary, while current assets have generally grown, the more volatile increase in current liabilities, especially in the latter periods, has compressed the current ratio. This trend indicates an overall diminishing liquidity buffer, suggesting the company may face increased short-term financial pressure despite the growth in assets.
Quick Ratio
Kraft Foods Group Inc., quick ratio calculation (quarterly data)
| Mar 28, 2015 | Dec 27, 2014 | Sep 27, 2014 | Jun 28, 2014 | Mar 29, 2014 | Dec 28, 2013 | Sep 28, 2013 | Jun 29, 2013 | Mar 30, 2013 | Dec 29, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30), 10-K (reporting date: 2012-12-29), 10-Q (reporting date: 2012-09-30), 10-12B/A (reporting date: 2012-06-30), 10-12B/A (reporting date: 2012-03-31).
1 Q1 2015 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several trends regarding liquidity and short-term financial health over the observed periods.
- Total Quick Assets
- Total quick assets showed a generally increasing trend from March 31, 2012, to December 28, 2013, rising from 1178 million USD to a peak of 2734 million USD. After this peak, there was a decline through September 27, 2014, down to 2021 million USD, followed by a slight recovery in the first quarter of 2015 to 2397 million USD. This pattern suggests an initial strengthening of liquid assets, followed by a period of contraction and moderate stabilization.
- Current Liabilities
- Current liabilities fluctuated significantly during the period. Starting at 2480 million USD in March 2012, they generally increased with some volatility to reach a high of 4884 million USD in March 2015. Notably, there were substantial rises especially from June 2014 onwards, indicating growing short-term obligations. This increase in liabilities could reflect either increased operational demands or financial stress requiring more short-term borrowing or payables.
- Quick Ratio
- The quick ratio, which measures the company's ability to cover current liabilities with quick assets, displayed improvement from 0.48 in March 2012 to a peak of 0.81 in September 2013. This enhanced liquidity position was maintained relatively steadily until December 2013. However, a pronounced decline occurred afterwards, falling to 0.47 by September 2014 and remaining at about 0.49 in the first quarter of 2015. This decline reflects a reduction in liquid asset coverage relative to liabilities, which might be concerning from a short-term solvency perspective.
- Overall Analysis
- While total quick assets and the quick ratio initially improved, suggesting strengthening liquidity, the last segments of the data indicate a weakening liquidity position. Current liabilities increased substantially towards the end of the period, outpacing the growth in quick assets, which is evidenced by the falling quick ratio. This scenario signals a potential liquidity risk, emphasizing the need for close monitoring of short-term obligations and liquid assets management.
Cash Ratio
Kraft Foods Group Inc., cash ratio calculation (quarterly data)
| Mar 28, 2015 | Dec 27, 2014 | Sep 27, 2014 | Jun 28, 2014 | Mar 29, 2014 | Dec 28, 2013 | Sep 28, 2013 | Jun 29, 2013 | Mar 30, 2013 | Dec 29, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 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-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30), 10-K (reporting date: 2012-12-29), 10-Q (reporting date: 2012-09-30), 10-12B/A (reporting date: 2012-06-30), 10-12B/A (reporting date: 2012-03-31).
1 Q1 2015 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The financial data exhibit notable variations in the liquidity position and short-term obligations over the observed periods. The total cash assets display a significant upward trend starting from March 31, 2012, with a considerable increase between September 30, 2012, and December 29, 2012, peaking around December 28, 2013. Following this peak, there is a fluctuating but generally declining pattern extending through March 28, 2015.
Current liabilities consistently remain at a high level throughout the periods, showing cyclical fluctuations. From March 31, 2012, liabilities increase modestly until December 29, 2012, after which there are intermittent rises and declines. A sharp increase occurs between June 28, 2014, and March 28, 2015, with the highest value recorded in the last period at 4,884 million US dollars.
The cash ratio, a measure of liquidity, follows an upward trend beginning near zero in early 2012, reaching a peak of 0.49 in December 2013. After this peak, the ratio gradually declines, indicating a relative decrease in liquid assets compared to current liabilities, settling around 0.24 by March 28, 2015.
- Total Cash Assets
- There is an initial phase of very low cash assets, followed by a pronounced growth period culminating near the end of 2013. Subsequent quarters show a decrease with some volatility but never returning to the initial low levels.
- Current Liabilities
- Current liabilities exhibit persistent volatility with a general upward trajectory towards the later periods, highlighting growing short-term financial obligations. Peaks in liability correspond with some troughs in cash assets, implying potential liquidity pressure points.
- Cash Ratio
- The cash ratio improvement from near zero to about 0.49 signifies enhanced liquidity capacity in mid-2013 to late 2013. The subsequent decline reflects diminishing liquidity relative to current liabilities, suggesting increasing reliance on other sources of liquidity or potential strain on short-term financial flexibility.