Warner Bros. Discovery Inc. (NASDAQ:WBD)

Current Ratio

The current ratio shows a significant decrease from 5.34 in 2017 to 1.06 in 2018, indicating a sharp decline in short-term liquidity during that period. However, from 2018 onwards, there is a gradual improvement, rising to 1.61 in 2019, 1.99 in 2020, and reaching 2.1 by the end of 2021. This trend suggests a recovery in the company's ability to cover short-term liabilities with current assets after the initial drop.

Quick Ratio

The quick ratio follows a similar pattern, dropping drastically from 4.89 in 2017 to 0.9 in 2018. Subsequently, it rises steadily over the next few years, increasing to 1.29 in 2019, 1.5 in 2020, and further to 1.84 in 2021. This improvement reflects a strengthening in the company's liquidity position when inventory is excluded from current assets.

Cash Ratio

The cash ratio experiences the most pronounced reduction, falling from 3.91 in 2017 to 0.25 in 2018. Despite this steep decline, the ratio shows a continuous upward trajectory in subsequent years, increasing to 0.48 in 2019, 0.68 in 2020, and 1.13 in 2021. This suggests that the company's cash and cash equivalents relative to current liabilities improved steadily after an initial liquidity tightening.

Overall Liquidity Trends

Across all three liquidity ratios, there is a clear pattern of significant deterioration from 2017 to 2018, indicating a substantial weakening of liquidity and short-term financial strength during that period. Following this decline, all ratios demonstrate consistent recovery and improvement through 2021. By the end of 2021, these ratios suggest a more balanced and healthier liquidity position compared to the low points reached in 2018. This overall trend could reflect shifts in operational efficiency, asset management, or liability restructuring that enhanced the company's liquidity over time.

The data presents several key financial metrics over a five-year period, reflecting the company's liquidity and short-term financial health.

Current Assets

There was a significant decline in current assets from 9991 million US dollars in 2017 to 4231 million in 2018. Following this sharp drop, current assets experienced a gradual recovery, increasing to 5217 million in 2019, 6130 million in 2020, and 7264 million in 2021. Although the asset base grew steadily after the initial decrease, the levels in the later years remained below the 2017 peak.

Current Liabilities

Current liabilities showed a rising trend from 1871 million US dollars in 2017, reaching a peak of 3997 million in 2018. This was followed by a decline in 2019 and 2020, to 3239 million and 3082 million respectively. However, in 2021, there was a rise to 3459 million. The liabilities increased overall compared to 2017 but fluctuated moderately after peaking in 2018.

Current Ratio

The current ratio, a measure of liquidity and the company's ability to meet short-term obligations, decreased markedly from a very strong 5.34 in 2017 to 1.06 in 2018, indicating a reduced liquidity position. After 2018, an improving trend was observed with the ratio rising to 1.61 in 2019, 1.99 in 2020, and 2.1 in 2021. Despite this recovery, the ratio in 2021 remained below the exceptionally high level seen in 2017, suggesting a more moderate, but improving, liquidity position.

Overall, the data reveals a period of financial adjustment around 2018, characterized by significant declines in both current assets and current ratio, alongside a peak in current liabilities. Subsequently, there is an evident recovery and stabilization in liquidity metrics through to 2021, though the figures do not return to the exceptionally strong liquidity position of 2017.

Total Quick Assets

The total quick assets display a significant decline from 9,147 million USD in 2017 to 3,606 million USD in 2018. Following this low point, there is a gradual recovery observed in subsequent years, reaching 6,351 million USD in 2021. Despite the rebound, the level in 2021 remains below that of 2017, indicating that the company may have faced challenges affecting its liquid assets during the initial period and has been improving its position more recently.

Current Liabilities

Current liabilities show an overall increasing trend from 1,871 million USD in 2017 to 3,459 million USD in 2021. There is a notable spike in 2018, rising to 3,997 million USD, followed by a decrease in 2019 and 2020 before a slight increase again in 2021. This pattern suggests fluctuations in short-term obligations, with a pronounced peak in 2018 that may have exerted pressure on the company’s liquidity.

Quick Ratio

The quick ratio illustrates a marked decline from a strong 4.89 in 2017 to a low of 0.9 in 2018, indicating a significant reduction in immediate liquidity relative to current liabilities. From 2018 onwards, the ratio steadily improves, reaching 1.84 by 2021. This recovery suggests an enhancement in the company's ability to meet short-term liabilities quickly, although the ratio in 2021 has not returned to the very high level observed in 2017.

The financial data reveals several noteworthy trends over the five-year period. Total cash assets fluctuated significantly, beginning at a high level of $7,309 million in 2017 before decreasing sharply to $986 million in 2018. This was followed by a gradual recovery to $3,905 million by 2021, indicating a restoration of liquidity over time.

Current liabilities exhibited an overall increasing trend with some variability. Starting at $1,871 million in 2017, liabilities more than doubled to $3,997 million in 2018, after which they generally declined to $3,082 million in 2020. However, there was another uptick in 2021, reaching $3,459 million, suggesting some fluctuations in short-term obligations within the period.

The cash ratio, which measures the company's ability to cover current liabilities with its most liquid assets, experienced considerable variations reflecting changes in both cash assets and liabilities. It started at a very strong level of 3.91 in 2017, dropped drastically to 0.25 in 2018 indicating reduced liquidity coverage, and then improved steadily in subsequent years. By 2021, the cash ratio had risen to 1.13, surpassing the generally accepted benchmark of 1.0, signifying improved short-term financial health.

Overall, the data indicates a period of financial adjustment with a significant liquidity contraction in 2018 followed by a recovery phase. The company’s ability to meet immediate obligations with cash improved noticeably towards the end of the reported period despite fluctuations in current liabilities.