Texas Instruments Inc. (NASDAQ:TXN)

The analysis of liquidity metrics from March 31, 2022, to March 31, 2026, reveals a general long-term contraction in liquidity margins, although absolute values remain significantly above the standard threshold of 1.0, indicating a strong capacity to meet short-term obligations.

Current Ratio

The current ratio exhibits a pattern of volatility with periodic peaks. After an initial decline from 5.54 in March 2022 to 4.70 in December 2022, the ratio peaked at 5.72 in June 2023 and again at 5.81 in June 2025. Despite these fluctuations, a gradual downward trajectory is evident in the latter half of the period, concluding at 4.46 in March 2026. This suggests a fluctuating but consistently high buffer of current assets relative to current liabilities.

Quick Ratio

A more pronounced downward trend is observed in the quick ratio, which declined from 4.60 in March 2022 to 2.37 by March 2026. A significant drop occurred between September 2023 (4.12) and December 2023 (3.12), with a further low of 2.55 reached in December 2024. The compression of this ratio indicates a reduction in the availability of highly liquid assets, excluding inventories, to cover immediate liabilities.

Cash Ratio

The cash ratio demonstrates the most consistent and steepest decline of the three metrics. Starting at 3.89 in March 2022, the ratio steadily decreased to a low of 1.55 in December 2025, before ending at 1.65 in March 2026. This persistent reduction suggests a strategic shift or a decrease in the proportion of cash and cash equivalents held relative to current liabilities over the analyzed period.

The divergence between the current ratio and the quick ratio indicates that inventories have played a significant role in maintaining the current ratio's higher levels. Furthermore, the simultaneous decline in both the quick and cash ratios suggests a systemic reduction in the most liquid asset categories, though the overall liquidity position remains robust.

The liquidity position remains consistently strong across the analyzed period, characterized by a current ratio that stays significantly above the 1.0 threshold. Although the ratio exhibits volatility, fluctuating between a high of 5.81 and a low of 4.12, a substantial buffer of current assets is maintained relative to short-term obligations.

Current Assets Trends

Current assets experienced a period of growth starting from March 31, 2022, reaching a peak of 17,448 million US dollars by March 31, 2024. Following this peak, a downward trend occurred, with assets declining to 13,086 million US dollars by March 31, 2025, before stabilizing around 13,796 million US dollars by March 31, 2026.

Current Liabilities Trends

Current liabilities showed a general upward trajectory from 2,528 million US dollars in early 2022 to a peak of 3,686 million US dollars by September 30, 2024. A notable reduction is observed in the first half of 2025, where liabilities dropped to approximately 2,490 million US dollars, followed by a subsequent increase to 3,096 million US dollars by the end of the period.

Current Ratio Dynamics

The current ratio peaked at 5.81 on June 30, 2023, driven by a combination of rising assets and stabilizing liabilities. A contraction phase followed, leading to a period low of 4.12 on December 31, 2024, resulting from the simultaneous increase in liabilities and the beginning of a decline in current assets. A secondary peak of 5.81 occurred in June 2025 due to a sharp decrease in current liabilities, before the ratio settled at 4.46 by March 31, 2026.

The liquidity profile of the organization exhibits a sustained downward trend over the analyzed period, moving from a position of substantial excess liquidity to a more lean operating posture. While the quick ratio remains well above the conventional threshold of 1.0, indicating a continued ability to meet short-term obligations without relying on inventory sales, the margin of safety has narrowed significantly.

Quick Asset Trends

Total quick assets remained relatively stable between March 2022 and December 2023, fluctuating within the range of 10.3 billion to 12.0 billion US dollars. However, a sharp contraction occurred starting in late 2024, with assets declining to 6.86 billion US dollars by March 2025. Asset levels remained suppressed throughout 2025 and early 2026, stabilizing between 6.8 billion and 7.3 billion US dollars.

Current Liability Dynamics

Current liabilities showed a general upward trajectory from March 2022 (2.53 billion US dollars) through December 2024, peaking at 3.68 billion US dollars in September 2024. A notable and temporary reduction occurred in March 2025, where liabilities dropped to 2.49 billion US dollars, before returning to the 3.1 billion US dollar range for the remainder of the observed period.

Quick Ratio Analysis

The quick ratio decreased from a high of 4.60 in March 2022 to 2.37 by March 2026. The most aggressive deterioration occurred between June 2023 (4.24) and December 2024 (2.55), driven by the simultaneous increase in current liabilities and the subsequent reduction in liquid assets. Although a brief recovery to 2.93 was noted in June 2025, the ratio continued to decline through the end of the period.

The overall trajectory suggests a strategic shift or an operational change that has reduced the volume of highly liquid assets relative to short-term debt. Despite the decline, the company maintains a quick ratio exceeding 2.0, which signifies a robust liquidity position capable of absorbing significant short-term financial shocks.

An overall downward trajectory is observed in the cash ratio from March 31, 2022, through March 31, 2026. The ratio declined from a peak of 3.89 to a closing value of 1.65, indicating a reduction in the immediate capacity to cover short-term obligations using only the most liquid assets.

Cash Asset Trends

Total cash assets remained relatively stable, fluctuating between $8.3 billion and $10.4 billion from March 2022 through December 2024. A sharp contraction is evident starting in the first quarter of 2025, where cash assets dropped to approximately $5 billion and remained within a narrow range between $4.8 billion and $5.3 billion through March 2026.

Current Liability Fluctuations

Current liabilities showed a gradual increase from $2.5 billion in early 2022, reaching a peak of $3.68 billion by September 2024. Although a temporary decrease to $2.4 billion occurred in the first half of 2025, obligations trended upward again to approximately $3.1 billion by the end of the period.

Cash Ratio Analysis

The decline in the cash ratio occurred in two primary phases. The first phase, from March 2022 to December 2023, saw the ratio move from 3.89 to 2.58, driven largely by increasing liabilities. The second phase, beginning in late 2024 and continuing through 2025, saw the ratio drop further to 1.65, primarily driven by the substantial reduction in total cash assets. Despite this decline, the ratio remains above 1.0, signifying that the most liquid assets continue to exceed total current liabilities.