Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
3M Co., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
The financial ratios indicate the company's short-term liquidity position over multiple quarters from March 2018 to September 2022. The analysis covers the current ratio, quick ratio, and cash ratio, each reflecting a different aspect of liquidity.
- Current Ratio
- The current ratio displays fluctuations within a range approximately between 1.4 and 2.3. Early periods show a generally stable trend near or slightly above 1.65, with a notable peak at 2.3 in September 2019. Following this peak, the ratio experiences a decline, dropping to around 1.41 in December 2019. Subsequently, it rises again to roughly 1.9 in 2020 and then settles into a gradual downward trend from 1.83 in March 2021 to 1.47 by June 2022, slightly improving to 1.56 by September 2022. This suggests that while the company's ability to cover short-term liabilities with current assets remains adequate (above 1), there is a mild weakening in liquidity in the later periods.
- Quick Ratio
- The quick ratio, which excludes inventory from current assets, displays a pattern akin to the current ratio but generally lower in value. Starting near 1.04 in March 2018, it rises to a high of 1.63 in September 2019 before sharply falling to a low of 0.79 in December 2019. Recovery occurs in 2020 with values exceeding 1.2 but decreases persistently from 1.19 in March 2021 to a low of 0.8 in September 2022. This decline may indicate a reduction in liquid assets excluding inventories relative to current liabilities, suggesting increasing reliance on less liquid current assets or rising current liabilities.
- Cash Ratio
- The cash ratio, representing the most conservative liquidity measure by considering only cash and cash equivalents, follows a broadly similar trend. Initially around 0.46 in March 2018, it peaks at 0.99 in September 2019 before dropping sharply to 0.27 by December 2019. A gradual recovery to approximately 0.63 occurs by December 2020, followed by a steady decline to 0.3 in September 2022. This trend suggests diminishing cash reserves available for immediate short-term obligation coverage, which may warrant closer monitoring of cash flow dynamics.
In summary, the liquidity profile demonstrates cyclical fluctuations with notable peaks around mid to late 2019 across all ratios. While there is recovery post the sharp declines seen at the end of 2019, the overall trajectory from early 2021 to mid-2022 indicates a gradual weakening liquidity position. Emphasis on maintaining or improving quick and cash ratios may be advisable to sustain a robust short-term financial health.
Current Ratio
3M Co., current ratio calculation (quarterly data)
| Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||
| Current assets | 14,895) | 14,514) | 14,452) | 15,403) | 16,426) | 16,343) | 15,345) | 14,982) | 14,110) | 14,106) | 15,090) | 12,971) | 18,020) | 14,051) | 14,374) | 13,709) | 14,419) | 13,890) | 14,818) | ||||||
| Current liabilities | 9,543) | 9,896) | 9,152) | 9,035) | 9,635) | 9,440) | 8,363) | 7,948) | 7,410) | 7,282) | 9,134) | 9,222) | 7,821) | 7,265) | 7,125) | 7,244) | 7,336) | 8,902) | 8,959) | ||||||
| Liquidity Ratio | |||||||||||||||||||||||||
| Current ratio1 | 1.56 | 1.47 | 1.58 | 1.70 | 1.70 | 1.73 | 1.83 | 1.89 | 1.90 | 1.94 | 1.65 | 1.41 | 2.30 | 1.93 | 2.02 | 1.89 | 1.97 | 1.56 | 1.65 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Current Ratio, Competitors2 | |||||||||||||||||||||||||
| Boeing Co. | 1.22 | 1.25 | 1.30 | 1.33 | 1.36 | 1.35 | 1.33 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Caterpillar Inc. | 1.41 | 1.45 | 1.44 | 1.46 | 1.61 | 1.56 | 1.60 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Eaton Corp. plc | 1.28 | 0.97 | 0.99 | 1.04 | 1.27 | 1.10 | 1.51 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| GE Aerospace | 1.10 | 1.13 | 1.19 | 1.28 | 1.80 | 1.81 | 1.96 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Honeywell International Inc. | 1.24 | 1.20 | 1.21 | 1.30 | 1.29 | 1.41 | 1.43 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lockheed Martin Corp. | 1.28 | 1.27 | 1.27 | 1.42 | 1.42 | 1.36 | 1.38 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| RTX Corp. | 1.09 | 1.10 | 1.16 | 1.19 | 1.23 | 1.17 | 1.17 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Current ratio = Current assets ÷ Current liabilities
= 14,895 ÷ 9,543 = 1.56
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several trends related to liquidity and the balance between current assets and current liabilities over the reporting periods.
- Current Assets
- Current assets exhibit variability throughout the periods but generally maintain a level within a range of approximately 13,700 to 18,000 million US dollars. Notably, a peak occurs in September 2019 with current assets reaching 18,020 million, while a relative trough is observed in December 2019 at 12,971 million. Following the recovery from that low, current assets remain fairly stable with moderate increases and decreases, ending near the higher end of the range around 14,895 million by the last period reported in September 2022.
- Current Liabilities
- Current liabilities fluctuate over the quarters but mostly remain between 7,100 and 9,900 million US dollars. There is an observable increase in liabilities toward the end of 2019 and throughout 2021, peaking at 9,896 million in June 2022. Early periods such as March 2019 and thereafter show a moderate decline or stabilization relative to earlier years before rising again.
- Current Ratio
- The current ratio demonstrates notable changes indicative of shifting liquidity conditions. The ratio exceeds 2.0 in some quarters (e.g., March 2019 at 2.02 and September 2019 at 2.3), signaling strong liquidity during those periods. However, sharp declines are seen in December 2019, dropping to 1.41, which may reflect a substantial reduction in liquidity. Thereafter, the current ratio generally oscillates between approximately 1.5 and 1.9, indicating moderate liquidity but without returning to the stronger levels observed in earlier periods. Towards the end of the timeline, the current ratio progressively decreases, culminating near 1.56 by the last reported quarter.
Overall, the data suggests that while current assets and liabilities both experience fluctuations, periods of lower liquidity are notably tied to spikes in liabilities or reductions in current assets. The current ratio’s decline in late 2019 could be a point of concern, signaling tightened liquidity, although some recovery appears in subsequent quarters. Recent trends point toward a somewhat lower liquidity buffer compared to earlier years, which may warrant ongoing monitoring to ensure sufficient coverage of short-term obligations.
Quick Ratio
3M Co., quick ratio calculation (quarterly data)
| Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||
| Cash and cash equivalents | 3,404) | 2,722) | 3,247) | 4,564) | 4,878) | 4,695) | 4,636) | 4,634) | 4,121) | 4,219) | 4,253) | 2,353) | 7,731) | 2,849) | 2,938) | 2,853) | 3,185) | 2,801) | 3,491) | ||||||
| Marketable securities, current | 185) | 262) | 112) | 201) | 855) | 805) | 501) | 404) | 440) | 247) | 224) | 98) | 30) | 139) | 539) | 380) | 338) | 385) | 604) | ||||||
| Accounts receivable, net of allowances | 4,722) | 4,914) | 4,815) | 4,660) | 4,916) | 4,991) | 4,817) | 4,705) | 4,623) | 4,459) | 4,821) | 4,791) | 5,020) | 5,374) | 5,173) | 5,020) | 5,329) | 5,383) | 5,252) | ||||||
| Total quick assets | 8,311) | 7,898) | 8,174) | 9,425) | 10,649) | 10,491) | 9,954) | 9,743) | 9,184) | 8,925) | 9,298) | 7,242) | 12,781) | 8,362) | 8,650) | 8,253) | 8,852) | 8,569) | 9,347) | ||||||
| Current liabilities | 9,543) | 9,896) | 9,152) | 9,035) | 9,635) | 9,440) | 8,363) | 7,948) | 7,410) | 7,282) | 9,134) | 9,222) | 7,821) | 7,265) | 7,125) | 7,244) | 7,336) | 8,902) | 8,959) | ||||||
| Liquidity Ratio | |||||||||||||||||||||||||
| Quick ratio1 | 0.87 | 0.80 | 0.89 | 1.04 | 1.11 | 1.11 | 1.19 | 1.23 | 1.24 | 1.23 | 1.02 | 0.79 | 1.63 | 1.15 | 1.21 | 1.14 | 1.21 | 0.96 | 1.04 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Quick Ratio, Competitors2 | |||||||||||||||||||||||||
| Boeing Co. | 0.29 | 0.28 | 0.29 | 0.34 | 0.38 | 0.38 | 0.37 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Caterpillar Inc. | 0.78 | 0.81 | 0.84 | 0.89 | 1.00 | 1.02 | 1.08 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Eaton Corp. plc | 0.65 | 0.50 | 0.51 | 0.54 | 0.69 | 0.44 | 0.66 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| GE Aerospace | 0.73 | 0.75 | 0.82 | 0.93 | 0.90 | 0.90 | 1.06 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Honeywell International Inc. | 0.85 | 0.82 | 0.84 | 0.94 | 0.96 | 1.06 | 1.08 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lockheed Martin Corp. | 1.06 | 1.03 | 1.03 | 1.15 | 1.18 | 1.10 | 1.09 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| RTX Corp. | 0.70 | 0.71 | 0.76 | 0.81 | 0.82 | 0.79 | 0.79 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 8,311 ÷ 9,543 = 0.87
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in key liquidity measures over the observed periods.
- Total Quick Assets
- Total quick assets exhibit fluctuations across the quarters, with values generally ranging between approximately 7,200 million and 12,800 million US dollars. The highest value is observed in the third quarter of 2019, reaching 12,781 million, followed by a notable decline in the subsequent quarters. After peaking in late 2019, the asset base experiences some volatility but tends to decrease gradually, particularly in 2022, where it dips below 8,400 million US dollars on some occasions.
- Current Liabilities
- Current liabilities demonstrate less pronounced volatility compared to quick assets but still display a gradual upward trajectory over the time frame. Starting near 8,959 million US dollars in early 2018, liabilities increase to hover near 9,500 to 9,800 million by 2022, indicating an expansion in short-term obligations. Occasional dips are noted, but the overall pattern suggests increasing pressure on current liabilities, potentially impacting liquidity.
- Quick Ratio
- The quick ratio exhibits significant variability, reflecting the interplay between quick assets and current liabilities. Early periods show ratios around or slightly above 1.0, suggesting an equilibrium in short-term liquidity. Noteworthy spikes occur in the second and third quarters of 2019, where the ratio reaches as high as 1.63, indicating strong liquidity during that interval. However, this is followed by a sharp decline to 0.79 by the end of 2019. Subsequently, the ratio mostly remains near or just above 1.0 until early 2021, when a gradual decline begins, culminating in values below 0.9 during much of 2022.
Overall, the data indicate that liquidity levels were generally adequate or strong through 2018 and much of 2019 but became more constrained from late 2019 onward. The peak in quick assets during 2019 was not matched by a proportional increase in liabilities, temporarily improving the quick ratio. However, the subsequent decreases in quick assets combined with rising current liabilities have put pressure on liquidity ratios, particularly noticeable in 2022. This pattern suggests increased financial obligations relative to liquid assets, which could warrant attention for liquidity management and short-term financial strategy going forward.
Cash Ratio
3M Co., cash ratio calculation (quarterly data)
| Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||
| Cash and cash equivalents | 3,404) | 2,722) | 3,247) | 4,564) | 4,878) | 4,695) | 4,636) | 4,634) | 4,121) | 4,219) | 4,253) | 2,353) | 7,731) | 2,849) | 2,938) | 2,853) | 3,185) | 2,801) | 3,491) | ||||||
| Marketable securities, current | 185) | 262) | 112) | 201) | 855) | 805) | 501) | 404) | 440) | 247) | 224) | 98) | 30) | 139) | 539) | 380) | 338) | 385) | 604) | ||||||
| Total cash assets | 3,589) | 2,984) | 3,359) | 4,765) | 5,733) | 5,500) | 5,137) | 5,038) | 4,561) | 4,466) | 4,477) | 2,451) | 7,761) | 2,988) | 3,477) | 3,233) | 3,523) | 3,186) | 4,095) | ||||||
| Current liabilities | 9,543) | 9,896) | 9,152) | 9,035) | 9,635) | 9,440) | 8,363) | 7,948) | 7,410) | 7,282) | 9,134) | 9,222) | 7,821) | 7,265) | 7,125) | 7,244) | 7,336) | 8,902) | 8,959) | ||||||
| Liquidity Ratio | |||||||||||||||||||||||||
| Cash ratio1 | 0.38 | 0.30 | 0.37 | 0.53 | 0.60 | 0.58 | 0.61 | 0.63 | 0.62 | 0.61 | 0.49 | 0.27 | 0.99 | 0.41 | 0.49 | 0.45 | 0.48 | 0.36 | 0.46 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Cash Ratio, Competitors2 | |||||||||||||||||||||||||
| Boeing Co. | 0.16 | 0.14 | 0.15 | 0.20 | 0.23 | 0.24 | 0.24 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Caterpillar Inc. | 0.21 | 0.21 | 0.22 | 0.31 | 0.36 | 0.39 | 0.43 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Eaton Corp. plc | 0.08 | 0.07 | 0.06 | 0.08 | 0.11 | 0.06 | 0.20 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| GE Aerospace | 0.35 | 0.37 | 0.44 | 0.54 | 0.52 | 0.50 | 0.67 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Honeywell International Inc. | 0.44 | 0.43 | 0.49 | 0.59 | 0.60 | 0.68 | 0.71 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lockheed Martin Corp. | 0.15 | 0.11 | 0.12 | 0.26 | 0.18 | 0.18 | 0.20 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| RTX Corp. | 0.14 | 0.13 | 0.17 | 0.22 | 0.22 | 0.23 | 0.24 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 3,589 ÷ 9,543 = 0.38
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets exhibit noticeable fluctuations over the observed periods. Initially, cash assets decreased from 4,095 million USD in the first quarter of 2018 to a low of 2,988 million USD by the middle of 2019. A significant spike occurred in the third quarter of 2019, where cash assets sharply increased to 7,761 million USD, before declining again towards the end of 2019. Throughout 2020 and 2021, cash assets showed a steady upward trajectory, peaking at 5,733 million USD in the third quarter of 2021. However, in 2022, there is a downward trend with cash assets falling back to levels around 3,500 million USD by the third quarter.
- Current Liabilities
- Current liabilities range consistently between approximately 7,100 million USD and 9,900 million USD. The liabilities show a minor dip during the latter part of 2018 and early 2019, then increase moderately through 2019 and 2020. The highest current liabilities are observed in mid-2022, nearing 9,896 million USD. The data indicates a general seasonal pattern with some growth in liabilities over the four-year span, peaking around mid-2021 and mid-2022.
- Cash Ratio
- The cash ratio generally mirrors the fluctuations in cash assets relative to current liabilities. The ratio starts at 0.46 in early 2018, dips to a low of 0.27 by the end of 2019, coinciding with the drop in cash assets and rise in liabilities. Thereafter, the ratio improves significantly in 2020, remaining around 0.6 for most of 2020 and 2021, suggesting a stronger liquidity position during this period. However, in 2022, the cash ratio declines once more to around 0.3 to 0.38, signaling reduced liquidity relative to current liabilities.
- Overall Trends and Insights
- There is evident volatility in cash assets with intermittent peaks and troughs. Despite these fluctuations in cash, current liabilities maintain a relatively steady and somewhat upward trend, indicating growing short-term obligations. The cash ratio reflects these dynamics, with periods of strengthened liquidity typically aligning with increased cash reserves and moderate liabilities. The weaker cash ratio in late 2019 and mid-2022 indicates tighter liquidity conditions that may warrant monitoring. The data suggests a cyclical cash management strategy with an overall challenge in consistently maintaining high liquidity against rising current liabilities.