Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Altria Group Inc., liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Current ratio | 0.49 | 0.84 | 0.71 | 0.79 | 0.59 | |
| Quick ratio | 0.33 | 0.67 | 0.54 | 0.56 | 0.28 | |
| Cash ratio | 0.33 | 0.47 | 0.53 | 0.55 | 0.26 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The liquidity profile reflects a consistent position where short-term obligations exceed current assets, as all primary liquidity ratios remained below 1.0 throughout the analyzed period. A general trend of improvement was observed between 2019 and 2022, followed by a sharp contraction in all liquidity metrics by the end of 2023.
- Current Ratio
- The current ratio exhibited significant volatility, rising from 0.59 in 2019 to a peak of 0.84 in 2022 before dropping to 0.49 in 2023. The 2023 figure represents the lowest point in the five-year sequence, indicating a diminished capacity to cover short-term liabilities with current assets.
- Quick Ratio
- The quick ratio followed a trajectory similar to the current ratio, increasing from 0.28 in 2019 to 0.67 in 2022 and subsequently falling to 0.33 in 2023. The relatively small variance between the current and quick ratios suggests that inventories constitute a minimal portion of the current asset composition.
- Cash Ratio
- The cash ratio peaked at 0.55 in 2020 and entered a period of steady decline over the subsequent three years, concluding at 0.33 in 2023. This trend highlights a reduction in the most liquid assets available for immediate debt settlement.
The simultaneous decline of all three ratios in 2023 indicates a systemic tightening of liquidity. The overall pattern suggests a strategic reliance on continuous cash flow or external financing to manage short-term obligations, as the asset base is insufficient to provide a standalone liquidity cushion.
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Current Ratio
Altria Group Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 5,585) | 7,220) | 6,083) | 7,117) | 4,824) | |
| Current liabilities | 11,319) | 8,616) | 8,579) | 9,063) | 8,174) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 0.49 | 0.84 | 0.71 | 0.79 | 0.59 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Coca-Cola Co. | 1.13 | 1.15 | 1.13 | — | — | |
| Mondelēz International Inc. | 0.62 | 0.60 | 0.74 | — | — | |
| PepsiCo Inc. | 0.85 | 0.80 | 0.83 | — | — | |
| Philip Morris International Inc. | 0.75 | 0.72 | 0.92 | — | — | |
| Current Ratio, Sector | ||||||
| Food, Beverage & Tobacco | 0.85 | 0.82 | 0.91 | — | — | |
| Current Ratio, Industry | ||||||
| Consumer Staples | 0.84 | 0.87 | 0.93 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= 5,585 ÷ 11,319 = 0.49
2 Click competitor name to see calculations.
An analysis of the liquidity position reveals a consistent state of negative working capital, as the current ratio remained below 1.0 throughout the entire period from 2019 to 2023. While there was a period of gradual improvement in the liquidity profile between 2019 and 2022, the most recent fiscal year shows a sharp deterioration in the ability to cover short-term obligations with short-term assets.
- Current Ratio Trends
- The current ratio exhibited an upward trend from 0.59 in 2019 to a peak of 0.84 in 2022. However, this progress was reversed in 2023, with the ratio dropping to 0.49, the lowest level recorded in the five-year sequence. This indicates a significant contraction in short-term liquidity coverage.
- Asset and Liability Dynamics
- Current assets fluctuated over the period, rising from 4,824 million US$ in 2019 to a high of 7,220 million US$ in 2022, before declining to 5,585 million US$ in 2023. Conversely, current liabilities followed a general growth trajectory, increasing from 8,174 million US$ in 2019 to 11,319 million US$ in 2023.
- 2023 Liquidity Contraction
- The precipitous decline in the current ratio in 2023 is attributed to a dual impact: a reduction in current assets of approximately 22.5% and a simultaneous increase in current liabilities of approximately 31.2% compared to the previous year. This divergence has intensified the gap between short-term obligations and available liquid resources.
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Quick Ratio
Altria Group Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 3,686) | 4,030) | 4,544) | 4,945) | 2,117) | |
| Receivable from the sale of IQOS System commercialization rights | —) | 1,721) | —) | —) | —) | |
| Receivables | 71) | 48) | 47) | 137) | 152) | |
| Total quick assets | 3,757) | 5,799) | 4,591) | 5,082) | 2,269) | |
| Current liabilities | 11,319) | 8,616) | 8,579) | 9,063) | 8,174) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 0.33 | 0.67 | 0.54 | 0.56 | 0.28 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Coca-Cola Co. | 0.72 | 0.77 | 0.81 | — | — | |
| Mondelēz International Inc. | 0.33 | 0.35 | 0.48 | — | — | |
| PepsiCo Inc. | 0.66 | 0.58 | 0.56 | — | — | |
| Philip Morris International Inc. | 0.28 | 0.29 | 0.44 | — | — | |
| Quick Ratio, Sector | ||||||
| Food, Beverage & Tobacco | 0.51 | 0.49 | 0.58 | — | — | |
| Quick Ratio, Industry | ||||||
| Consumer Staples | 0.37 | 0.38 | 0.43 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 3,757 ÷ 11,319 = 0.33
2 Click competitor name to see calculations.
The liquidity position from 2019 to 2023 is characterized by a period of gradual improvement followed by a sharp contraction in the final reporting year. While the company successfully increased its liquidity coverage between 2019 and 2022, the figures for 2023 indicate a significant deterioration in the ability to cover short-term obligations using only the most liquid assets.
- Quick Ratio Trajectory
- The quick ratio exhibited a positive trend for the first four years, rising from 0.28 in 2019 to a peak of 0.67 in 2022. However, this progress was largely erased in 2023, as the ratio dropped precipitously to 0.33, indicating a weakened immediate liquidity posture.
- Quick Assets Analysis
- Total quick assets experienced substantial volatility, increasing from 2,269 million US$ in 2019 to a high of 5,799 million US$ in 2022. A subsequent contraction to 3,757 million US$ in 2023 served as a primary driver for the decline in the overall quick ratio.
- Current Liabilities Trends
- Short-term obligations remained relatively stable between 2019 and 2022, fluctuating within a range of 8,174 million US$ to 9,063 million US$. In 2023, a significant increase in current liabilities to 11,319 million US$ occurred, compounding the liquidity pressure alongside the reduction in quick assets.
- Liquidity Implications
- Throughout the entire five-year period, the quick ratio remained consistently below 1.0. This pattern suggests that the company does not maintain sufficient liquid assets to cover all current liabilities immediately, necessitating a reliance on the sale of inventory or other current assets to meet short-term debts. The 2023 data highlights a heightened risk profile due to the simultaneous increase in liabilities and decrease in liquid holdings.
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Cash Ratio
Altria Group Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 3,686) | 4,030) | 4,544) | 4,945) | 2,117) | |
| Total cash assets | 3,686) | 4,030) | 4,544) | 4,945) | 2,117) | |
| Current liabilities | 11,319) | 8,616) | 8,579) | 9,063) | 8,174) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.33 | 0.47 | 0.53 | 0.55 | 0.26 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Coca-Cola Co. | 0.58 | 0.59 | 0.63 | — | — | |
| Mondelēz International Inc. | 0.10 | 0.11 | 0.25 | — | — | |
| PepsiCo Inc. | 0.32 | 0.20 | 0.23 | — | — | |
| Philip Morris International Inc. | 0.12 | 0.12 | 0.23 | — | — | |
| Cash Ratio, Sector | ||||||
| Food, Beverage & Tobacco | 0.28 | 0.24 | 0.34 | — | — | |
| Cash Ratio, Industry | ||||||
| Consumer Staples | 0.22 | 0.23 | 0.30 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 3,686 ÷ 11,319 = 0.33
2 Click competitor name to see calculations.
The analysis of liquidity from 2019 to 2023 reveals a cyclical trend in the cash ratio, characterized by a sharp improvement in 2020 followed by a sustained period of contraction.
- Cash Asset Trends
- Total cash assets exhibited a significant increase from 2,117 million USD in 2019 to a peak of 4,945 million USD in 2020. Following this peak, a steady downward trajectory was observed, with assets declining to 3,686 million USD by December 31, 2023.
- Current Liabilities Trends
- Current liabilities remained relatively stable between 2019 and 2022, fluctuating within a range of 8,174 million USD to 9,063 million USD. A substantial increase occurred in 2023, with liabilities rising to 11,319 million USD, indicating a notable escalation in short-term financial obligations.
- Cash Ratio Interpretation
- The cash ratio rose from 0.26 in 2019 to 0.55 in 2020, reflecting a strengthened capacity to cover immediate liabilities with liquid assets. This metric subsequently entered a period of gradual decline, falling to 0.53 in 2021, 0.47 in 2022, and finally to 0.33 in 2023. The decline in the final year is particularly pronounced, driven by the simultaneous reduction in cash holdings and the sharp spike in current liabilities.
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