Moderna Inc. (NASDAQ:MRNA)

The financial liquidity ratios over the analyzed periods exhibit notable fluctuations and an overall trend of improvement in recent quarters. Initially, liquidity ratios were exceptionally high, with all three ratios—current, quick, and cash—peaking around the middle of 2020 before experiencing a sharp decline towards the end of that year.

Current ratio

The current ratio started at a very elevated level above 9 in the first quarter of 2020, rising to a peak of 17.3 in the second quarter of 2020. Subsequently, it decreased sharply to near 1.4 by the end of 2020. This rapid decline suggests a reduction in current assets relative to current liabilities post-peak. From 2021 onwards, the ratio mostly hovered between 1.2 and 1.8 for the majority of the year, indicating stabilization after the initial drop. Notably, from early 2022, the current ratio resumed an upward trajectory, reaching above 4 by the latest quarter in 2024. This indicates a strengthening liquidity position in recent periods.

Quick ratio

The quick ratio followed a similar pattern to the current ratio, starting very high at above 9 in early 2020 and peaking around 17 in mid-2020. It then declined to approximately 1.13 to 1.52 through the end of 2021, reflecting a normalization of liquid assets relative to liabilities. Beginning in 2022, the quick ratio steadily increased, surpassing 3.8 in the latest period by the third quarter of 2024. The increase in quick ratio over the past several quarters indicates that liquid assets excluding inventories have grown, improving the company's ability to meet short-term obligations.

Cash ratio

The cash ratio also exhibited an initial extreme peak near 9 in the first quarter of 2020 and 16.8 in the second quarter of 2020, before falling rapidly to just below 1 by the end of 2020. This sharp fall points toward a major decrease in cash and cash equivalents relative to current liabilities post-peak. After remaining close to or slightly below 1 throughout 2021, the cash ratio began rising markedly in 2022, reaching levels above 3.5 by mid-2024 before a slight dip in the latest quarter observed. This upward trend suggests a growing buffer of cash reserves relative to liabilities over recent quarters.

Overall, the liquidity ratios demonstrate a company initially with very high short-term liquidity, sharply contracting by the end of 2020, and subsequently experiencing a sustained recovery and strengthening of liquidity through 2022 into 2024. The improvement in all three measures—current, quick, and cash ratios—indicates a positive trend in the company’s short-term financial health and ability to cover liabilities with assets, particularly more liquid assets post-2021.

The analysis of the quarterly financial metrics indicates distinct patterns in the company's liquidity position over the observed periods.

Current Assets

The current assets exhibit significant growth from early 2020 through the end of 2021, rising sharply from 1,250 million USD to a peak of 16,071 million USD by December 2021. This upward trend is followed by a period of decline beginning in the first quarter of 2022, decreasing to approximately 10,325 million USD by the end of 2023, and finally stabilizing near 9,666 million USD by the third quarter of 2024.

Current Liabilities

Current liabilities show an upward trajectory from 135 million USD in the first quarter of 2020, reaching their highest point at 9,957 million USD in the third quarter of 2021. After this peak, liabilities gradually decline through to 2,201 million USD by the third quarter of 2024. This suggests a reduction in short-term obligations over time following the 2021 peak.

Current Ratio

The current ratio experienced dramatic fluctuations during the period. Early 2020 saw exceptionally high ratios up to 17.3, due predominantly to relatively low liabilities compared to assets. This ratio then dropped sharply in late 2020 and through 2021, reaching a low near 1.24 in mid-2021. From late 2021 onwards, the ratio steadily improved, rising to values exceeding 4.0 by mid-2024. The increasing current ratio post-2021 indicates strengthening liquidity and potentially enhanced capacity to cover short-term liabilities.

Overall Liquidity Trends

Initially, liquidity metrics reflect a strong asset base with minimal liabilities, which subsequently transitioned to a phase of elevated liabilities and moderated asset levels resulting in reduced liquidity ratios. Following 2021, the company managed to reduce liabilities concurrently with a stabilization of current assets, achieving a progressively improving current ratio indicative of stronger short-term financial health.

The company’s liquidity position, as measured by total quick assets and current liabilities, exhibits significant fluctuations over the examined periods. Total quick assets grew substantially from early 2020 to early 2021, reaching a peak around March 31, 2021, before experiencing a general decline with some intermittent recoveries through 2024. Conversely, current liabilities increased sharply during 2020 and peaked in late 2021, followed by a marked reduction thereafter, notably declining into 2024.

The quick ratio, a key indicator of short-term liquidity, displayed a pronounced decline from an extremely high level in early 2020 through 2020 and the early part of 2021, reflecting the rapid rise in current liabilities relative to quick assets. Subsequently, starting around late 2021, the quick ratio began a steady recovery, indicating an improved capacity to cover short-term obligations with liquid assets. This upward trend continues robustly through 2023 and into 2024, with the quick ratio surpassing prior levels by reaching values above 3.6 by the end of the latest period.

Trends in Total Quick Assets

Total quick assets almost quadrupled from March 31, 2020, to March 31, 2021, signifying substantial growth in liquid resources. Following this peak, quick assets diminished gradually and stabilized, with values mostly ranging between approximately $8.4 billion and $11 billion through 2024.

Patterns in Current Liabilities

Current liabilities surged dramatically from $135 million in March 2020 to over $9 billion by late 2021, reflecting increased short-term obligations during this timeframe. After peaking, liabilities decreased consistently, dropping to about $2.2 billion by September 2024, suggesting successful liability management or reduced operational obligations.

Quick Ratio Dynamics

The quick ratio sharply decreased from an abnormally high 17.01 in mid-2020 to approximately 1.13 in mid-2021, indicating that liabilities grew at a faster rate than liquid assets during this period. However, a reversal occurred starting late 2021, with the ratio increasing steadily to 3.83 by September 2024. This points to an enhanced ability to meet short-term liabilities with available quick assets and overall improved liquidity health.

In summary, the period marked an initial phase of rapid growth in both liquid assets and liabilities, followed by a contraction in liabilities and stabilization of assets. The improving quick ratio in recent quarters signals strengthened liquidity and better financial stability to meet current obligations.

Total Cash Assets

The total cash assets showed a general upward trend from early 2020 through the end of 2021, increasing from approximately $1.2 billion to over $10.7 billion. This strong growth phase was followed by a noticeable decline starting in early 2022, with cash assets dropping to around $7.9 billion by mid-2022. Subsequently, the total cash assets fluctuated moderately, with values ranging mostly between $7.5 billion and $9.0 billion through 2023 and into the first half of 2024. The latest available data at the third quarter of 2024 shows a decline to approximately $6.9 billion, which marks the lowest level since mid-2022.

Current Liabilities

Current liabilities experienced a significant increase during 2020, rising from $135 million in the first quarter to a peak of $9.9 billion by the third quarter of 2021. After this peak, liabilities substantially decreased, dropping below $5 billion by the end of 2022 and continuing to decline steadily through 2023 and into 2024. By the third quarter of 2024, current liabilities had decreased to around $2.2 billion, representing a clear reduction from the peak levels observed in 2021.

Cash Ratio

The cash ratio initially began at a very high level of 9.05 in early 2020 and peaked at 16.81 by mid-2020, indicating a strong liquidity position relative to current liabilities at that time. However, as current liabilities grew rapidly in late 2020 and 2021, the cash ratio dropped sharply to below 1.0, reaching a low near 0.89 by the third quarter of 2021. From late 2021 onwards, the cash ratio recovered steadily, crossing above 1.0 by early 2022 and rising to a peak of 3.59 by mid-2024. This indicates an improving liquidity position with cash assets exceeding current liabilities by a significant margin once again. The ratio slightly declined to 3.12 by the third quarter of 2024, but still reflects a robust liquidity standing.

Overall Insights

The company demonstrated a strong accumulation of cash assets through 2020 and 2021, which coincided with a steep rise in current liabilities during the same period. This combination led to a sharp compression in the cash ratio, suggesting increased short-term financial obligations that considerably offset liquidity. Starting from late 2021, efforts appear to have been made to reduce liabilities substantially while maintaining a relatively high level of cash assets. This strategic shift improved the cash ratio considerably, restoring a strong liquidity position by mid-2024. The recent moderation in cash assets and slight reduction in the cash ratio in the latest quarter indicate cautious liquidity management, but the company remains well-positioned to cover its short-term obligations.