Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
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Liquidity Ratios (Summary)
Air Products & Chemicals Inc., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-K (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-K (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-K (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-K (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-K (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31).
- Current Ratio Trend
- The current ratio shows a consistent increasing trend starting from below 1.0 at the end of 2015, rising sharply during 2016 and reaching above 2.0 in early 2017. It peaks around 3.59 in early 2021 before slightly declining but remaining above 2.9 through mid-2021. This indicates improving liquidity and the company's increasing ability to cover short-term liabilities with current assets over the period.
- Quick Ratio Trend
- The quick ratio follows a similar upward trajectory to the current ratio. Beginning below 0.5 in late 2015, it increases notably through 2016 and stabilizes around the 2.0 to 2.5 range from 2017 to 2019. A significant rise occurs in 2020, exceeding 3.0 early in the year, suggesting strengthened liquid asset positions excluding inventory. It slightly recedes but remains elevated above 2.5 by mid-2021, indicating sustained strong short-term liquidity in terms of more liquid assets.
- Cash Ratio Trend
- The cash ratio starts very low in 2015, roughly 0.08, indicating minimal immediate cash coverage for current liabilities. It increases progressively over the years, surpassing 1.0 in early 2017, reflecting a substantial buildup of cash and cash equivalents relative to short-term liabilities. The ratio peaks near 2.63 in early 2021 and remains above 2.0 through mid-2021, highlighting a significant cash buffer. This suggests robust liquidity management with a strong emphasis on liquid cash holdings during the period.
- Overall Liquidity Analysis
- All three liquidity ratios demonstrate a pronounced improvement from 2015 through 2021. The company's capacity to meet short-term obligations strengthened markedly, particularly from 2016 onward. The pronounced increases in the quick and cash ratios underscore a strategic enhancement in the quality and immediacy of liquid assets available, reducing reliance on inventory for liquidity needs. The peak values around 2020-2021 may reflect conservative liquidity management possibly in response to external market uncertainties. Despite minor declines after their peaks, liquidity metrics remain robust, signaling a strong short-term financial position.
Current Ratio
Air Products & Chemicals Inc., current ratio calculation (quarterly data)
| 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 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | ||||||||
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| Current ratio1 | ||||||||||||||||||||||||||||||
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| Current Ratio, Competitors2 | ||||||||||||||||||||||||||||||
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| Sherwin-Williams Co. | ||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-K (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-K (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-K (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-K (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-K (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31).
1 Q3 2021 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals notable developments in the liquidity position over the observed periods.
- Current Assets
- Current assets exhibited a generally upward trajectory from the end of 2015 through early 2020, increasing from approximately 2.78 billion USD to a peak nearing 9.01 billion USD by June 2020. However, this was followed by a slight decline, with current assets settling around 8.38 billion USD by mid-2021. The sharp increase commencing around early 2020 suggests significant asset accumulation during that period, possibly tied to strategic initiatives or external market conditions.
- Current Liabilities
- Current liabilities initially demonstrated a decreasing trend from about 3.57 billion USD at the end of 2015 to roughly 1.81 billion USD by early 2019. This downward movement reflects a reduction in short-term obligations. Nonetheless, starting in early 2020, liabilities increased sharply from 1.81 billion USD to a high of approximately 3.00 billion USD by mid-2021, mirroring the rise observed in current assets.
- Current Ratio
- The current ratio improved markedly over the full timeframe. From a sub-1.0 ratio (0.78) at the end of 2015, which indicates potential liquidity risk, it rose steadily to above 3.0 by mid-2020 and remained close to this level thereafter. This improvement reflects a stronger liquidity position, indicating the company’s increased capacity to cover short-term liabilities with current assets. The peak ratios above 3.0 in 2020 and 2021 suggest a particularly robust liquidity buffer during this period.
In summary, the data indicate a strengthening liquidity profile over the years, with significant asset growth and prudent management of liabilities until early 2020, followed by simultaneous increases in both assets and liabilities. The current ratio’s sustained elevated level points to improved short-term financial stability throughout the examined period.
Quick Ratio
Air Products & Chemicals Inc., quick ratio calculation (quarterly data)
| 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 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | ||||||||
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| Quick ratio1 | ||||||||||||||||||||||||||||||
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| Quick Ratio, Competitors2 | ||||||||||||||||||||||||||||||
| Linde plc | ||||||||||||||||||||||||||||||
| Sherwin-Williams Co. | ||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-K (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-K (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-K (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-K (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-K (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31).
1 Q3 2021 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals important trends in liquidity over the observed periods. Total quick assets exhibited considerable fluctuations with a notable increase in early 2017. From December 2015 to September 2016, total quick assets rose markedly from approximately 1.57 billion to nearly 2.94 billion US dollars, indicating a strengthening liquidity position. This was followed by a temporary decline toward the end of 2016, before surging dramatically in the first nine months of 2017 to levels exceeding 4.8 billion US dollars. After this peak, total quick assets trended downward gradually until mid-2019, showing a reduction in liquid resources available. However, starting in early 2020, there was a sharp and significant increase, with quick assets more than doubling compared to previous periods, peaking around 7.85 billion US dollars by mid-2020 and maintaining elevated levels through mid-2021.
Current liabilities, in contrast, demonstrated a general downward movement from late 2015 through mid-2017, decreasing from about 3.57 billion to approximately 2.44 billion US dollars. This suggests a reduction in short-term obligations relative to the initial periods. Following this decline, liabilities remained relatively stable with minor fluctuations until early 2020. During 2020, coinciding with the surge in quick assets, current liabilities increased again, reaching close to 3 billion US dollars, before slightly tempering towards mid-2021.
The quick ratio, which measures the ability to cover current liabilities with quick assets, strongly correlates with the observed trends in assets and liabilities but shows an overall improving trend throughout the period. Initially low at 0.44 in late 2015 and early 2016, the quick ratio rose sharply in 2016–2017, peaking near 2.4 by the end of 2017. It then stabilized between 1.7 and 2.0 until late 2019, indicating a consistent capacity to meet short-term obligations more than once over with liquid assets. Beginning in 2020, the quick ratio increased substantially, exceeding 3.0 at its height in early 2021, suggesting a significantly improved liquidity position, likely driven by the spike in quick assets and partially offset by the rise in current liabilities during that period.
- Liquidity Trends
- Liquidity showed marked improvement over the total period, with total quick assets increasing significantly particularly in 2017 and again sharply in 2020, reflecting enhanced availability of liquid resources.
- Current liabilities declined initially, enhancing liquidity ratios, but experienced an increase in 2020, aligning with broader financial changes.
- The quick ratio improved from a low base in 2015 to consistently above 2.0 in most periods after 2017, peaking above 3.0 in early 2021, indicating a robust ability to cover current liabilities with quick assets.
Overall, the data suggest a strengthening liquidity profile over recent years, with liquidity ratios well above 1.0 in the majority of quarters, signaling a strong short-term financial health position. The significant increases in quick assets in 2020 warrant further investigation into underlying drivers, while the concurrent rise in liabilities reflects complex financial management during that period. The maintenance of high quick ratios indicates effective management of liquid assets relative to liabilities throughout the periods analyzed.
Cash Ratio
Air Products & Chemicals Inc., cash ratio calculation (quarterly data)
| 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 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||
| Cash and cash items | ||||||||||||||||||||||||||||||
| Short-term investments | ||||||||||||||||||||||||||||||
| Total cash assets | ||||||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||||
| Cash ratio1 | ||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Cash Ratio, Competitors2 | ||||||||||||||||||||||||||||||
| Linde plc | ||||||||||||||||||||||||||||||
| Sherwin-Williams Co. | ||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-K (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-K (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-K (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-K (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-K (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31).
1 Q3 2021 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the liquidity position and current liabilities over the observed periods. The total cash assets exhibit significant fluctuations, showing an overall increasing tendency between the end of 2015 and mid-2017, followed by some variability thereafter. Specifically, cash assets rose from approximately $279 million at the end of 2015 to a peak of over $3.67 billion in the third quarter of 2017. After another period of relative stability and moderate decline, a sharp increase was observed reaching over $6.43 billion in the second quarter of 2020, before slightly decreasing but remaining well above previous levels through mid-2021.
Current liabilities demonstrate a generally declining trend from the end of 2015 through late 2019, decreasing from about $3.57 billion to an approximate low of $1.82 billion by the third quarter of 2019. This reduction suggests an improvement in managing short-term obligations over this timeframe. However, starting in 2020, current liabilities showed a marked increase, peaking again near $3.0 billion by mid-2021, which may indicate increased short-term funding requirements or operational changes during that period.
The cash ratio, a key liquidity metric reflecting the company's ability to cover current liabilities with cash and cash equivalents, mirrors these movements. Initially low around 0.08 at the end of 2015, the ratio improved sharply by early 2016, reaching levels greater than 1.0 from early 2017 onwards, indicating enhanced liquidity security. Following some moderate variation, a pronounced surge to ratios above 2.0 occurred in 2020 and persisted through mid-2021. This elevated liquidity level suggests a conservative liquidity management approach or accumulation of cash reserves possibly in response to uncertain market conditions.
- Total Cash Assets
- Demonstrated substantial growth from late 2015 to mid-2017, followed by fluctuations and a significant rise in 2020.
- Current Liabilities
- Showed a declining trend through 2019, suggesting improved short-term financial management, but increased notably during 2020 and into 2021.
- Cash Ratio
- Moved from a low baseline to consistently exceeding 1.0 since 2017, with a marked increase above 2.0 in 2020 and beyond, indicating strong liquidity and a significant cash buffer relative to current obligations.
Overall, the data reflects a strengthening liquidity position over the several years, with substantial cash reserves and a growing buffer against current liabilities. The pattern of rising current liabilities in 2020, coupled with increased cash ratios, likely indicates a strategic response to external factors requiring enhanced liquidity and risk mitigation.