Texas Instruments Inc. (NASDAQ:TXN)

Current Ratio

The current ratio demonstrates a general downward trend over the observed periods, declining from a peak of 6.12 at the beginning to lower levels near 4.45 in the latest quarter. Despite some fluctuations, the ratio remains relatively high, indicating a strong capacity to cover short-term liabilities with current assets. The ratio sees periodic increases but the overall trajectory suggests a gradual reduction in liquidity.

Quick Ratio

The quick ratio also exhibits a decreasing pattern, dropping from an initial 4.86 to around 2.32 by the end of the analyzed timeline. The decline is more pronounced compared to the current ratio, suggesting a decrease in the most liquid assets relative to current liabilities. The quick ratio's reduction indicates a tightening in near-cash assets excluding inventory, potentially signaling a shift in asset composition or working capital management.

Cash Ratio

The cash ratio shows a consistent downward trend, falling from 3.93 to as low as 1.66 across the periods. The decline is steady and sharper than the current and quick ratios, reflecting a decreasing cash and cash equivalents position relative to current liabilities. This may imply more conservative cash holdings or increased use of cash for operational or investment purposes, affecting immediate liquidity.

Overall Analysis

All three liquidity measures—current, quick, and cash ratios—display a downward trend over time, with the cash ratio declining most significantly. Although current and quick ratios remain above typical benchmark levels, their declines suggest a gradual reduction in liquidity buffers. This trend could be indicative of changing asset management strategies, increased short-term obligations, or deliberate use of liquidity for growth or debt reduction. Monitoring these trends is advisable to ensure maintaining adequate liquidity to meet operational needs.

Current Assets

The current assets exhibit a generally increasing trend from March 2021 through March 2024, rising from 10,405 million USD to a peak of 17,448 million USD. This growth appears to reflect an expansion in liquid or short-term resources. However, starting from March 2024 onwards, current assets show a gradual decline, decreasing to 13,876 million USD by September 2025. This latter period suggests either a strategic reduction in current asset holdings or potential liquidity usage.

Current Liabilities

Current liabilities steadily increased from 1,700 million USD in March 2021 to a high point of 3,686 million USD in September 2024. Following this peak, liabilities decline sharply to 2,489 million USD by June 2025 but then rise again slightly by September 2025 to 3,118 million USD. This fluctuation indicates changes in short-term obligations with periods of both increased borrowing or payable obligations and subsequent reduction.

Current Ratio

The current ratio, an indicator of short-term liquidity, starts at a notably high level of 6.12 in March 2021, then gradually decreases with some fluctuations, reaching its lowest at 4.12 in December 2024. A subsequent rise is observed in early 2025, peaking at 5.81 in June 2025, and then a drop again by September 2025 to 4.45. Overall, despite downward pressure over the period, the current ratio remains comfortably above 1, signaling continued ability to cover current liabilities with current assets. However, the downward trend implies shrinking liquidity margins and potentially tighter short-term financial flexibility.

Summary of Trends and Implications

The data illustrates a phase of asset growth followed by reduction, coupled with an increasing then more variable liability profile. The gradual decrease in the current ratio suggests a tightening in liquidity, though it remains relatively strong. The shifts in current liabilities likely reflect active management of short-term debt or payables. The patterns point to enhanced operational scale up to early 2024, followed by a conservative or optimizing approach to working capital management thereafter, possibly in response to market or internal financial conditions.

The quarterly financial data reveals several noteworthy trends regarding liquidity and short-term financial health over the observed periods.

Total Quick Assets

Total quick assets generally experienced fluctuations across the reported quarters. Starting at 8,270 million US dollars in the first quarter of 2021, the figure rose to a peak of approximately 12,064 million US dollars in the first quarter of 2024, reflecting a growth trajectory over three years. However, a notable decline follows, with quick assets dropping to a low of 6,865 million US dollars by the first quarter of 2025, indicating a significant reduction in highly liquid assets available promptly. Although minor recoveries occurred at mid-2025, the overall trend toward the end of the period signals tightening liquidity.

Current Liabilities

Current liabilities showed a steady increase from 1,700 million US dollars in the first quarter of 2021 to a peak of 3,686 million US dollars in the third quarter of 2024, suggesting growing short-term obligations. There was a moderate reduction afterward, with liabilities decreasing to approximately 2,489 million US dollars by the first quarter of 2025 before rising slightly again. This fluctuation indicates periods of both increased and eased short-term financial pressure.

Quick Ratio

The quick ratio, a key measure of liquidity that compares quick assets to current liabilities, mirrored the trends in its numerator and denominator. It started at a high ratio of 4.86 in early 2021, conveying a strong liquidity position. This ratio declined gradually to around 2.88 by the third quarter of 2024 and further decreased to 2.32 by the last quarter reported. Although the ratio remained above 1.0 throughout, reflecting the company's capability to meet short-term liabilities without relying on inventory sales, the downward trend indicates decreasing liquidity margins and potential pressure on short-term financial flexibility.

In summary, while the company maintained adequate liquidity over the period reviewed, the observed decline in total quick assets coupled with a rise in current liabilities and a decreasing quick ratio suggests a tightening liquidity profile. This evolving pattern may warrant vigilance to ensure ongoing capacity to cover short-term obligations efficiently.

Total Cash Assets

The total cash assets exhibit significant fluctuations over the observed periods. Starting at $6,686 million in March 2021, cash assets increase notably to peak at $9,782 million by September 2021. Subsequently, there is a moderate decline through the end of 2021, with values stabilizing around $8,300 to $9,000 million in 2022. In 2023, a relatively stable pattern is maintained in the range of approximately $8,500 to $9,500 million, with a renewed peak of $10,393 million in March 2024. After this peak, cash assets decline consistently through 2024 and 2025, reaching a low of $5,186 million by September 2025. This downward trend from 2024 onwards indicates a diminishing cash reserve position over the most recent periods.

Current Liabilities

Current liabilities show an overall upward trajectory from March 2021 to December 2023. Beginning at $1,700 million in March 2021, liabilities increase steadily, reaching a peak of $3,686 million in September 2024. After this peak, liabilities exhibit some volatility but remain near elevated levels, with a value of $3,118 million in September 2025. The rising trend in current liabilities suggests growing short-term financial obligations over these years, potentially impacting liquidity management.

Cash Ratio

The cash ratio, which measures the ability to cover current liabilities with cash assets, displays a declining trend over the period. Initially high at 3.93 in March 2021, the ratio fluctuates mildly but declines persistently, from peaks around 4.05 in September 2021 to a lower level of approximately 1.66 by September 2025. This decline indicates a decrease in liquidity strength relative to short-term liabilities, suggesting a reduction in the company's buffer of immediate cash to meet obligations.

Overall Analysis

The combined trend of diminishing total cash assets, growing current liabilities, and a falling cash ratio points to a weakening liquidity position over time. The early periods show robust cash reserves well in excess of current liabilities, while later periods reveal tightening liquidity conditions. The company appears to be managing increased short-term obligations with relatively reduced cash assets, which may necessitate closer monitoring of working capital and liquidity risk going forward.