Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
T-Mobile US Inc., liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Current ratio | 0.91 | 0.91 | 0.77 | 0.89 | 1.10 | |
| Quick ratio | 0.70 | 0.68 | 0.57 | 0.66 | 0.84 | |
| Cash ratio | 0.27 | 0.25 | 0.18 | 0.28 | 0.48 |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Current Ratio
- The current ratio exhibits a declining trend from 1.1 in 2020 to a low of 0.77 in 2022, indicating a gradual reduction in the company's ability to cover its short-term liabilities with its short-term assets. However, a moderate recovery is observed in the subsequent years, stabilizing at 0.91 in 2023 and maintaining this level into 2024. Despite this improvement, the ratio remains below the 2020 level, suggesting a more constrained liquidity position relative to that earlier period.
- Quick Ratio
- The quick ratio also follows a similar downward trajectory, starting at 0.84 in 2020 and decreasing consistently to 0.57 in 2022. This drop signifies a decreased capacity to meet short-term obligations without relying on inventory sales. Following 2022, a slight increase occurs, with the ratio rising to 0.68 in 2023 and further to 0.7 in 2024, reflecting a partial restoration of liquid asset availability. Nonetheless, the ratio remains below the initial 2020 level, highlighting ongoing liquidity constraints.
- Cash Ratio
- The cash ratio reveals the most pronounced decline among the three liquidity measures, with values dropping from 0.48 in 2020 to a low of 0.18 in 2022. This indicates a significant reduction in the most liquid assets available to cover current liabilities. Similar to the other ratios, a recovery phase is noted post-2022, with increases to 0.25 in 2023 and 0.27 in 2024. Despite this rebound, the cash ratio remains substantially lower than the 2020 level, implying limited immediate cash resources relative to short-term obligations.
Current Ratio
T-Mobile US Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 18,404) | 19,015) | 19,067) | 20,891) | 23,885) | |
| Current liabilities | 20,174) | 20,928) | 24,742) | 23,499) | 21,703) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 0.91 | 0.91 | 0.77 | 0.89 | 1.10 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| AT&T Inc. | 0.66 | 0.71 | 0.59 | 0.70 | 0.82 | |
| Verizon Communications Inc. | 0.63 | 0.69 | 0.75 | 0.78 | 1.38 | |
| Current Ratio, Sector | ||||||
| Telecommunication Services | 0.68 | 0.74 | 0.69 | 0.75 | 1.05 | |
| Current Ratio, Industry | ||||||
| Communication Services | 1.23 | 1.29 | 1.29 | 1.42 | 1.74 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= 18,404 ÷ 20,174 = 0.91
2 Click competitor name to see calculations.
The financial data reveals noteworthy trends in the company's liquidity position over the five-year period ending December 31, 2024.
- Current Assets
- There is a consistent decline in current assets from US$23,885 million in 2020 to US$18,404 million in 2024. This steady decrease suggests a reduction in liquid resources or short-term assets available to cover liabilities.
- Current Liabilities
- Current liabilities increased initially, rising from US$21,703 million in 2020 to a peak of US$24,742 million in 2022. Subsequently, liabilities decreased to US$20,174 million by 2024, indicating some mitigation of short-term obligations.
- Current Ratio
- The current ratio experienced a downward trend from 1.1 in 2020 to a low of 0.77 in 2022, signaling diminishing ability to cover short-term liabilities with short-term assets. The ratio improved moderately to 0.91 by 2023 and stabilized at that level in 2024. This indicates some recovery in liquidity, yet the ratio remains below the 1.0 threshold, highlighting ongoing potential liquidity risk.
In summary, while current liabilities peaked in 2022 before decreasing, current assets steadily declined throughout the period analyzed. The current ratio reflects these movements, showing a weakening liquidity position in the earlier years followed by partial improvement, although it remains below the commonly preferred level. The data suggests the company experienced pressures on working capital management and may need to focus on enhancing short-term financial resilience.
Quick Ratio
T-Mobile US Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 5,409) | 5,135) | 4,507) | 6,631) | 10,385) | |
| Accounts receivable, net of allowance for credit losses | 4,276) | 4,692) | 4,445) | 4,194) | 4,276) | |
| Equipment installment plan receivables, net of allowance for credit losses and imputed discount | 4,379) | 4,456) | 5,123) | 4,748) | 3,577) | |
| Total quick assets | 14,064) | 14,283) | 14,075) | 15,573) | 18,238) | |
| Current liabilities | 20,174) | 20,928) | 24,742) | 23,499) | 21,703) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 0.70 | 0.68 | 0.57 | 0.66 | 0.84 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| AT&T Inc. | 0.28 | 0.33 | 0.27 | 0.45 | 0.47 | |
| Verizon Communications Inc. | 0.47 | 0.51 | 0.54 | 0.57 | 1.16 | |
| Quick Ratio, Sector | ||||||
| Telecommunication Services | 0.43 | 0.47 | 0.43 | 0.52 | 0.76 | |
| Quick Ratio, Industry | ||||||
| Communication Services | 1.04 | 1.11 | 1.08 | 1.23 | 1.53 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 14,064 ÷ 20,174 = 0.70
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets experienced a declining trend from 2020 to 2024. Starting at 18,238 million US dollars in 2020, the value decreased annually, reaching 14,064 million US dollars by 2024. This represents a gradual reduction in highly liquid assets over the five-year period, with the largest drops occurring between 2020 to 2022.
- Current liabilities
- The current liabilities showed a different pattern, generally increasing from 21,703 million US dollars in 2020 to a peak of 24,742 million US dollars in 2022. However, from 2022 onwards, there was a notable decline, with liabilities reducing to 20,174 million US dollars by 2024. This suggests an initial rise in short-term obligations followed by a significant reduction towards the later years.
- Quick ratio
- The quick ratio reflects the relationship between quick assets and current liabilities, exhibiting a decrease from 0.84 in 2020 to a low of 0.57 in 2022. Subsequently, the ratio improved, increasing to 0.70 by 2024. Despite the improvement in the latter years, the overall ratio remains below 1 throughout the period, indicating that quick assets consistently underperformed current liabilities, which may imply liquidity pressure.
Cash Ratio
T-Mobile US Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 5,409) | 5,135) | 4,507) | 6,631) | 10,385) | |
| Total cash assets | 5,409) | 5,135) | 4,507) | 6,631) | 10,385) | |
| Current liabilities | 20,174) | 20,928) | 24,742) | 23,499) | 21,703) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.27 | 0.25 | 0.18 | 0.28 | 0.48 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| AT&T Inc. | 0.07 | 0.13 | 0.07 | 0.25 | 0.15 | |
| Verizon Communications Inc. | 0.06 | 0.04 | 0.05 | 0.06 | 0.56 | |
| Cash Ratio, Sector | ||||||
| Telecommunication Services | 0.10 | 0.11 | 0.08 | 0.20 | 0.34 | |
| Cash Ratio, Industry | ||||||
| Communication Services | 0.62 | 0.68 | 0.65 | 0.81 | 1.07 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 5,409 ÷ 20,174 = 0.27
2 Click competitor name to see calculations.
The financial data indicates a downward trend in total cash assets from 2020 to 2022, followed by a moderate recovery in 2023 and 2024. Specifically, total cash assets decreased significantly from 10,385 million US dollars in 2020 to 4,507 million in 2022, amounting to a reduction of more than half over the two-year period. After reaching this low point, cash assets rose slightly to 5,135 million in 2023 and continued an incremental increase to 5,409 million in 2024.
Current liabilities showed a generally increasing trend from 2020 through 2022, rising from 21,703 million US dollars to 24,742 million. However, this upward movement reversed starting in 2023, with current liabilities decreasing to 20,928 million and further declining to 20,174 million in 2024. This shift may reflect efforts to manage short-term obligations more effectively.
The cash ratio, which measures liquidity by comparing cash and cash equivalents to current liabilities, illustrates the impact of the trends in both cash and liabilities. Beginning at 0.48 in 2020, the ratio fell to a low of 0.18 in 2022, correlating with the sharp decline in cash assets and the rise in liabilities. Subsequently, the cash ratio improved moderately to 0.25 in 2023 and 0.27 in 2024, consistent with the partial recovery of cash assets and reduction in current liabilities.
- Total Cash Assets
- Sharp decline from 2020 (10,385 million) to 2022 (4,507 million), then moderate increase up to 2024 (5,409 million).
- Current Liabilities
- Increase from 2020 (21,703 million) to 2022 (24,742 million), followed by a decrease through 2024 (20,174 million).
- Cash Ratio
- Declined from 0.48 in 2020 to 0.18 in 2022, then improved slightly to 0.27 by 2024, reflecting the interplay between cash assets and current liabilities.
Overall, the data suggests a period of strained liquidity peaking in 2022, with subsequent improvements driven by a combination of increasing cash reserves and declining short-term liabilities. The cash ratio remains below the initial 2020 level, indicating liquidity remains more constrained than in the earlier period but shows positive momentum toward stabilization.