Kraft Heinz Co. (NASDAQ:KHC)

Current ratio trend

The current ratio shows a general declining trend from early 2015 through 2017, dropping from 1.77 to a low point of around 0.72 by the end of 2017. After this period, the ratio exhibits some recovery and fluctuation, increasing to values above 1.0 intermittently in 2018 and 2019, peaking at 1.48 in the first quarter of 2020. Subsequently, it decreased slightly but remained above 1.0 by mid-2020.

Quick ratio trend

The quick ratio also demonstrates a downward trajectory from 1.07 in the first quarter of 2015 to a nadir of around 0.29 in late 2017. Following this, there is some volatility with moderate increases and decreases. Notably, there is a marked improvement from mid-2019 through the first quarter of 2020, reaching 0.97, before declining again to 0.60 in the middle of 2020. Despite fluctuations, the quick ratio remains below 1.0 throughout most of the period, indicating relatively lower liquidity compared to the current ratio.

Cash ratio trend

The cash ratio reveals a significant decline from 0.75 at the start of 2015 to a low of approximately 0.14 in early 2019. After this trough, the ratio shows some recovery, gradually increasing to a high of 0.68 in the first quarter of 2020 before falling again to 0.35 by mid-2020. Overall, this indicates a reduction in liquidity in terms of immediately available cash over the long term, with some episodic improvements during 2019 and 2020.

Liquidity analysis summary

Across all three liquidity metrics, there is a clear decline in the company's short-term financial health from 2015 through late 2017. This suggests increasing challenges in meeting short-term obligations with current assets, quick assets, and cash. The partial rebound observed from 2018 through early 2020 implies an improvement in liquidity management or asset composition during that interval. However, none of the ratios consistently exceed the 1.0 threshold, signifying that the company generally maintains a conservative liquidity position but faces limitations in converting assets into cash quickly. The variations in the cash ratio particularly highlight the constraint on the most liquid resources throughout the timeframe analyzed.

The analysis of the quarterly financial data reveals several trends regarding the liquidity position of the company over the examined periods.

Current Assets

Current assets generally fluctuated across the quarters, with a noticeable increase in the third quarter of 2015 reaching above 10 billion USD, followed by a gradual decline throughout 2016. There is a moderate increase again in mid-2018, but values remain below the peak observed in 2015. The data for 2020 shows variability, including a significant rise in the first quarter of 2020 exceeding 11 billion USD before dropping back to below 9 billion USD in the second quarter.

Current Liabilities

Current liabilities exhibit a generally upward trend over the same period, with a substantial jump from early 2015 to late 2015, peaking above 10 billion USD by the end of 2017. Thereafter, liabilities show some volatility but remain relatively high compared to earlier years, with a slight decreasing tendency but still above 7.8 billion USD in mid-2020.

Current Ratio (Liquidity Ratio)

The current ratio shows a decline from strong liquidity positions above 1.7 in early 2015 down to figures below 1.0 during most of 2016 and 2017, indicating potential liquidity pressures during that time. Beginning in late 2018 and through 2019 into 2020, the current ratio improves gradually, rising back to values exceeding 1.0 and reaching as high as 1.48 in the first quarter of 2020. This suggests an improvement in the company's ability to cover short-term liabilities with short-term assets in recent periods.

Overall, the data suggests that the company experienced tighter liquidity conditions during 2016 and 2017, likely due to an increase in current liabilities outpacing current assets. However, from late 2018 onward, there is evidence of recovery with the current ratio moving back above 1.0, signifying a strengthening liquidity position. The fluctuations in current assets and liabilities throughout the period indicate ongoing changes in the company's working capital management and short-term financial obligations.

Total quick assets

The total quick assets show a fluctuating pattern over the observed periods. Starting at 2,717 million US dollars in March 2015, there was a notable increase reaching a peak of 6,291 million by December 2015. Subsequently, a declining trend is observed until mid-2017, where values fell to approximately 2,806 million. Afterward, a recovery phase occurred in late 2017 and early 2018, with quick assets rising again to 5,356 million by June 2018. The values remain variable through 2019 and early 2020, experiencing a significant jump to 7,724 million in March 2020 followed by a drop to 4,857 million in June 2020. This volatility indicates periods of both strengthening and weakening liquidity positions.

Current liabilities

Current liabilities generally exhibit higher figures compared to quick assets across the given timeline, indicating a consistent level of short-term obligations. Starting at 2,532 million US dollars in March 2015, there is a sharp increase until December 2015, peaking at 6,932 million. The liabilities further rise to above 9,000 million during 2016 and remain relatively elevated with fluctuations between roughly 7,500 million and 10,132 million. From 2017 through mid-2020, liabilities maintain a high level with only moderate variation, reflecting sustained pressure on the company’s short-term financial commitments.

Quick ratio

The quick ratio demonstrates a declining trend from early 2015 through late 2017, beginning at 1.07 and falling below 0.3 by December 2017. This signals a diminishing capacity to cover current liabilities using liquid assets. An improvement is seen in the following year 2018 with an increase to around 0.59 by mid-year. However, the ratio again falls below 0.5 during 2019, indicating continued liquidity challenges. Notably, there is a substantial rebound to 0.97 in March 2020, suggesting a temporary restoration of liquidity, before dropping back to 0.6 by June 2020. The overall low quick ratio values for most periods imply constrained short-term financial flexibility.

The financial data reflects notable fluctuations and trends in liquidity measures over the observed periods. The total cash assets exhibit considerable volatility, with periods of substantial increases followed by sharp declines. For example, cash assets peaked significantly around the end of 2015 and mid-2020, reaching over $4 billion and $5 billion respectively, compared to lows near $1.1 billion to $1.6 billion in late 2018 and parts of 2019.

Current liabilities demonstrate a generally elevated and fluctuating balance throughout the reported timeframe. After a sharp rise from early 2015 through late 2015, liabilities remained at elevated levels, periodically fluctuating between approximately $7.5 billion and $10 billion. This indicates persistent high short-term obligations relative to cash holdings.

The cash ratio, which measures the company's ability to cover current liabilities with cash and cash equivalents, exhibits a declining trend from 2015 through late 2019, reaching lows around 0.14 to 0.20. This decline reflects a weakening buffer of cash relative to short-term obligations. However, a notable improvement is observed in mid-2020 when the cash ratio rises sharply to 0.68, indicating strengthened liquidity at that time, although it decreases again shortly after.

Overall, the data suggests that while total cash assets and liabilities have fluctuated substantially, the company experienced periods of both adequate and constrained liquidity management. The late 2015 period and mid-2020 stand out as times when cash reserves were relatively strong compared to current liabilities, enhancing short-term financial stability. Conversely, the extended period from 2016 to 2019 reflects tighter liquidity conditions, with the cash ratio often below 0.20, indicating potential pressure on covering current liabilities solely with cash assets.