Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
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- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Dividend Discount Model (DDM)
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Revenues
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Liquidity Ratios (Summary)
Anadarko Petroleum Corp., liquidity ratios
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Current ratio | ||||||
| Quick ratio | ||||||
| Cash ratio |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
- Current Ratio
- The current ratio exhibited a declining trend from 1.7 in 2012 to 0.95 in 2015, indicating a reduction in short-term liquidity over this period. However, in 2016, the ratio rebounded to 1.58, suggesting an improvement in the company's ability to cover its short-term liabilities with its current assets.
- Quick Ratio
- Similar to the current ratio, the quick ratio decreased steadily from 1.31 in 2012 to 0.82 in 2015, reflecting a diminishing capacity to meet immediate obligations without relying on inventory liquidation. In 2016, there was a notable recovery to 1.48, signifying enhanced liquidity and a stronger position in liquid assets.
- Cash Ratio
- The cash ratio showed relative stability initially, with minor fluctuations from 0.62 in 2012 to 0.72 in 2014. It then sharply declined to 0.22 in 2015, indicating significantly reduced cash and cash equivalents compared to current liabilities. By 2016, the ratio increased substantially to 0.96, demonstrating a marked improvement in cash availability to cover short-term obligations.
Current Ratio
Anadarko Petroleum Corp., current ratio calculation, comparison to benchmarks
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Current ratio1 | ||||||
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
1 2016 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- The current assets demonstrated a significant increase from 2012 to 2014, rising from 6,795 million US dollars to a peak of 11,221 million in 2014. However, there was a sharp decline in 2015 to 3,982 million, followed by a partial recovery in 2016, with current assets rising to 5,266 million. This pattern indicates a period of substantial asset accumulation until 2014, succeeded by a pronounced reduction and a modest rebound thereafter.
- Current Liabilities
- Current liabilities exhibited a rising trend from 3,994 million in 2012 to a high of 10,234 million in 2014, essentially mirroring the ascent in current assets during the same period. Subsequently, liabilities dropped considerably to 4,181 million in 2015 and declined further to 3,328 million in 2016. This sharp decrease could be associated with efforts to reduce short-term obligations or altered working capital management after 2014.
- Current Ratio
- The current ratio, reflecting liquidity, declined steadily from 1.7 in 2012 to below the critical threshold of 1.0 in 2015, reaching 0.95. This suggests increasing liquidity risk or tighter short-term financial conditions during that period. In 2016, the current ratio improved significantly to 1.58, signaling enhanced liquidity and a stronger buffer to cover current liabilities with current assets.
- Overall Trends and Insights
- The data reveals a cyclical pattern of growth and contraction in working capital components between 2012 and 2016. The simultaneous peak in current assets and liabilities in 2014 suggests heightened operational scale or possibly increased short-term financing and inventory levels. The subsequent sharp drop in both assets and liabilities in 2015 indicates a substantial downsizing or restructuring of short-term financial positions. Following this, the improved current ratio in 2016 reflects a relatively more prudent liquidity position compared to the prior two years, potentially enhancing the company's short-term financial stability.
Quick Ratio
Anadarko Petroleum Corp., quick ratio calculation, comparison to benchmarks
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | ||||||
| Accounts receivable, net of allowance, customers | ||||||
| Accounts receivable, net of allowance, others | ||||||
| Total quick assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Quick ratio1 | ||||||
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
1 2016 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total quick assets
- Throughout the five-year period, total quick assets exhibited significant fluctuations. Starting at 5,218 million USD at the end of 2012, there was an increase to 6,420 million USD in 2013, followed by a notable rise to a peak of 9,896 million USD in 2014. This peak was succeeded by a sharp decline in 2015, reaching 3,408 million USD, and then partially recovering to 4,912 million USD by the end of 2016.
- Current liabilities
- Current liabilities showed a rising trend from 3,994 million USD in 2012 to a peak of 10,234 million USD in 2014. Subsequently, there was a considerable reduction over the next two years, falling to 4,181 million USD in 2015 and then further to 3,328 million USD in 2016. Overall, the liabilities increased significantly in the initial three years, before decreasing sharply in the last two years under review.
- Quick ratio
- The quick ratio displayed a general downward trend in the first four years, signifying a declining capability to cover short-term liabilities with liquid assets. It decreased from 1.31 in 2012 to 0.82 in 2015, indicating that quick assets were initially sufficient but later became insufficient to meet current liabilities promptly. However, in 2016, the quick ratio increased significantly to 1.48, implying improved liquidity and a stronger short-term financial position compared to prior years.
- Overall Analysis
- The liquidity position as reflected by the quick ratio decreased notably from 2012 through 2015, due largely to the steep increase in current liabilities surpassing the growth of quick assets. The peak of current liabilities in 2014 combined with a lesser increase in quick assets resulted in the quick ratio falling below 1.0 starting in 2014, indicating potential liquidity risk. The subsequent reduction in liabilities and partial recovery in quick assets during 2015 and 2016 improved the liquidity position markedly by the end of 2016. Such volatility suggests periods of financial strain with effective corrective measures in the latter part of the period.
Cash Ratio
Anadarko Petroleum Corp., cash ratio calculation, comparison to benchmarks
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | ||||||
| Total cash assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Cash ratio1 | ||||||
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
1 2016 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets demonstrated notable fluctuations over the observed period. There was a significant increase from 2,471 million USD at the end of 2012 to a peak of 7,369 million USD in 2014. However, this was followed by a sharp decline to 939 million USD in 2015. Subsequently, a recovery was observed in 2016, with cash assets rising again to 3,184 million USD. This pattern indicates volatility in cash holdings with a peak in 2014 and a substantial drop in the following year.
- Current Liabilities
- Current liabilities increased substantially from 3,994 million USD in 2012 to 10,234 million USD in 2014, more than doubling over this two-year span. After reaching this peak, liabilities decreased significantly to 4,181 million USD in 2015 and further to 3,328 million USD in 2016. This suggests that the company faced increased short-term obligations up to 2014 but subsequently managed to reduce these liabilities considerably in the two following years.
- Cash Ratio
- The cash ratio, which measures the company's ability to cover its current liabilities with its cash assets, showed varying trends. Starting at 0.62 in 2012, the ratio increased slightly to 0.65 in 2013 and further to 0.72 in 2014, indicating improving liquidity. However, in 2015 the ratio dropped substantially to 0.22, reflecting a sharp decline in liquidity due to reduced cash assets and elevated liabilities. In 2016, the cash ratio rebounded to 0.96, signifying a strong improvement in liquidity and near parity between cash assets and current liabilities.
- Summary
- Overall, the data reveals a period of rising cash assets and liabilities until 2014, followed by significant reductions in both in 2015. Liquidity, as measured by the cash ratio, improved initially through 2014, deteriorated sharply in 2015, and then recovered strongly by 2016. This suggests the company experienced volatility in its short-term financial position and took actions after 2014 to enhance liquidity and reduce liabilities significantly.