Altria Group Inc. (NYSE:MO)

The analysis of the liquidity ratios over the presented periods reveals distinct trends in the company's short-term financial health.

Current Ratio

The current ratio exhibited some fluctuation throughout the timeline. Initially, it increased steadily from 0.71 to 0.8 between the first quarter of 2020 and the first quarter of 2021, indicating an improvement in the company's ability to cover its short-term liabilities with current assets. However, this was followed by a decline starting mid-2021, reaching a low of 0.33 by the third quarter of 2023. There was a minor rebound towards the end of 2023 and into early 2024, though the ratio remained below 0.5, suggesting a weakened liquidity position in recent quarters compared to previous years.

Quick Ratio

The quick ratio trends mirror those of the current ratio, reflecting a similar pattern in liquid assets excluding inventories. After a modest rise from 0.52 to 0.59 in the first quarter of 2021, a significant decline ensued, bottoming out at 0.15 in the third quarter of 2023. Subsequently, the ratio recovered slightly to around 0.34 by mid-2024 but stayed considerably lower than earlier levels. This indicates a reduced capacity to meet short-term obligations with the most liquid assets over the latest periods.

Cash Ratio

The cash ratio showed a comparable trajectory, rising from 0.5 to 0.58 up to early 2021, followed by a sharp decline to its lowest of 0.07 in the third quarter of 2023. Following this trough, there was a partial recovery to approximately 0.33 in mid-2024. This pattern signals notably diminished cash and cash equivalents available to cover current liabilities during the latter stages of the timeframe, recovering somewhat yet remaining well below initial levels.

Overall, the liquidity ratios indicate that the company experienced an initial strengthening of short-term financial capacity through early 2021, after which liquidity diminished substantially across all three metrics. The partial recovery observed in late 2023 and early 2024 suggests some improvement efforts, but liquidity remains a concern given the below-unity ratios throughout and the recent low points.

Current Assets

Current assets showed fluctuations over the periods analyzed. The values started at 7,935 million US dollars and declined to lows around 3,390 to 4,338 million in mid-2023 before rising again to approximately 5,198 million by mid-2024. Overall, the trend demonstrates volatility with periods of both significant decline and partial recovery, particularly noticeable around mid-2020, mid-2022, and mid-2023.

Current Liabilities

Current liabilities exhibited a generally higher level compared to current assets and remained somewhat elevated throughout the periods. Initial values exceeded 11,000 million US dollars, then showed a decline toward mid-2020 to below 6,000 million, but later rebounded, reaching figures close to or above 11,000 million again by the end of 2023. In 2024, liabilities decreased moderately but stayed materially higher than current assets, ranging between 7,782 and 10,935 million.

Current Ratio

The current ratio, indicating short-term liquidity, started below 1 at approximately 0.71, improving marginally toward 0.8 in early 2021. However, it subsequently declined to as low as 0.33 by late 2023. There was a brief improvement to 0.84 at the end of 2022, but this was not sustained. Throughout 2024, the ratio continued to remain below 0.5, signaling that current assets consistently fell below current liabilities, representing potential liquidity pressure.

Summary

Overall, the data suggests that the company faced challenges maintaining an optimal liquidity position. Despite occasional improvement periods, current liabilities persistently outpaced current assets, contributing to a current ratio consistently below 1 and often below 0.5 in recent quarters. The volatility in current assets and liabilities indicates variability in working capital components, which may have operational or financial planning implications. The pattern reflects potential short-term liquidity constraints that could warrant management attention.

Total Quick Assets

The total quick assets demonstrated a fluctuating pattern over the periods analyzed. Initially, the value decreased from 5,763 million USD at the end of Q1 2020 to a low of 2,009 million USD in Q2 2021. This was followed by a recovery phase through late 2021 and early 2022, where assets rose back to approximately 5,799 million USD by Q4 2022. However, after this peak, a general declining trend emerged, dropping to 1,594 million USD by Q3 2023, then slightly recovering to around 1,984 million USD by Q3 2024. These movements indicate volatility in liquid asset levels, with significant declines particularly evident in mid-2021 and mid-2023.

Current Liabilities

Current liabilities showed variability with some notable increases and decreases throughout the quarterly periods. Starting from 11,154 million USD in Q1 2020, the figure generally decreased until Q2 2021, reaching a low of 5,783 million USD, implying some reduction in short-term obligations. Subsequent quarters saw liabilities increase again, peaking at 11,664 million USD in Q2 2023, before a downward adjustment to 7,782 million USD by Q3 2024. The fluctuation suggests shifts in short-term obligations possibly related to operational or financing activities.

Quick Ratio

The quick ratio, measuring the company's ability to meet short-term liabilities with its most liquid assets, exhibited a generally low and somewhat unstable pattern. Values hovered in the 0.3 to 0.6 range, frequently falling below the commonly regarded threshold of 1.0, which suggests potential liquidity concerns. Peaks were observed around Q4 2022 (0.67) and Q1 2021 (0.59), while troughs appeared in Q3 2023 (0.15) and Q2 2021 (0.35). The ratio’s volatility aligns with the observed fluctuations in quick assets and current liabilities, indicating periods when the company’s short-term financial strength was particularly constrained.

Overall Analysis

The data indicates a cyclical pattern in liquidity metrics, with the company experiencing periods of asset declines and corresponding liability adjustments. The recurring low quick ratios highlight challenges in maintaining strong short-term liquidity throughout the timeframe. The variations in quick assets and current liabilities suggest active management of working capital but also raise concerns about consistent liquidity risk. Monitoring these trends closely would be advisable to mitigate potential financial stress in future periods.

The analysis of financial data over multiple quarters reveals noteworthy variations in cash assets, current liabilities, and the cash ratio, indicating shifts in liquidity and short-term financial stability.

Total Cash Assets

Cash assets displayed fluctuating behavior throughout the periods. Initially, there was a general decline from 5,616 million to 4,123 million US dollars between March and September 2020, followed by a recovery reaching 5,792 million by March 2021. A marked drop occurred in June 2021 to 1,877 million, after which cash steadily increased again, peaking at 4,544 million by December 2021. In the following years, the trend showed volatility, with notable troughs during 2022 and mid-2023, dipping as low as 874 million in June 2023. The data towards 2024 shows modest improvement but still remained below earlier high levels.

Current Liabilities

Current liabilities varied significantly, starting at 11,154 million US dollars in March 2020, decreasing to a low of 5,783 million in June 2021, before generally trending upwards again. Periods such as March 2022 and December 2023 experienced spikes, with liabilities exceeding 11,000 million. Despite fluctuations, a pattern emerges of recurring high liabilities interspersed with sharp decreases, reflecting possibly cyclical debt management or operational financing strategies.

Cash Ratio

The cash ratio, calculated as cash assets divided by current liabilities, indicated variation in immediate liquidity. Starting at around 0.5 in early 2020, the ratio maintained moderate stability in the first year, with values mostly between 0.5 and 0.58. However, it notably declined after mid-2021, reaching lows near 0.07 in June 2023. Some recovery was visible by December 2023 and into 2024, but the ratio remained below earlier levels, frequently staying under 0.33, suggesting decreased availability of cash relative to short-term obligations.

Overall, the data points to considerable volatility in both cash holdings and liabilities. The decreasing cash ratio in recent periods raises concerns about short-term liquidity strength. This may warrant closer attention to working capital management and cash flow optimization to ensure adequate coverage of current liabilities. The periodic reductions in liabilities might reflect repayments or restructuring efforts, but persistent fluctuations highlight potential operational or financial challenges requiring strategic oversight.