Constellation Brands Inc. (NYSE:STZ)

The analysis of liquidity ratios over the reported period reveals notable variability in the company's short-term financial strength and ability to cover its current liabilities with various levels of liquid assets.

Current Ratio

The current ratio showed fluctuating trends, ranging approximately between 1.08 and 2.4. Initially, the ratio demonstrated moderate stability around 1.5 to 1.8 from mid-2017 through early 2018, followed by a decline reaching near 1.08 by late 2018. This was succeeded by a recovery phase where the ratio peaked at 2.4 around early 2021, indicating an improved short-term liquidity position. Subsequently, the ratio tapered down again and stabilized closer to the range of 1.2 to 1.4 towards the end of the observed periods. The variation suggests intermittent changes in current assets relative to current liabilities, reflecting periods of strengthened liquidity and others of more constrained short-term financial flexibility.

Quick Ratio

The quick ratio remained consistently below 1 throughout the timeframe, varying mostly between 0.3 and 0.98. Early values were modest, generally below 0.55, with a low point near 0.29 in late 2018. A significant improvement occurred around early 2021 where the ratio almost doubled to 0.98, signifying an increased proportion of liquid assets excluding inventories available to meet current obligations. After this peak, the quick ratio experienced a decline and mostly settled between 0.4 and 0.6 in subsequent quarters. This ratio pattern indicates a cautious increase in immediate liquidity during certain periods but generally suggests a reliance on less liquid current assets to fulfill short-term liabilities.

Cash Ratio

The cash ratio remained markedly low throughout, fluctuating predominantly between 0.03 and 0.36, which indicates a limited amount of cash and cash equivalents available relative to current liabilities. From 2017 through early 2018, the ratio hovered around 0.05 to 0.11, followed by a decline to as low as 0.03 in late 2018 and mid-2019. A notable spike occurred around early 2021 reaching 0.36, pointing to an interim period of stronger immediate cash coverage. Nevertheless, the ratio decreased once more in subsequent periods and generally stayed below 0.1, underscoring a restrained cash position relative to the company’s short-term obligations.

In summary, the liquidity measures reveal periodic improvements in the company's ability to meet short-term liabilities, particularly pronounced in early 2021 across all three ratios. However, notwithstanding these intervals of enhanced liquidity, the overall data reflect a cautious liquidity posture, with consistently modest quick and cash ratios that imply dependence on inventory and other current assets rather than solely on immediately available liquid funds. The fluctuations indicate responsiveness to operational or market conditions affecting working capital components over the analyzed periods.

The analysis of the quarterly financial data reveals several discernible trends in the liquidity position of the company over the observed periods.

Current Assets

Current assets have generally exhibited moderate fluctuations over the analyzed timeframe, starting at approximately 3,360,500 thousand USD and reaching levels around 3,525,900 thousand USD by the final period. Notable dips occurred around early 2021, with a low of approximately 3,044,500 thousand USD, followed by a recovery towards later periods. These variations suggest periods of asset adjustments possibly linked to operational cycles or changes in working capital management.

Current Liabilities

Current liabilities display greater volatility relative to current assets, with a starting value near 2,182,400 thousand USD and ending at approximately 2,725,000 thousand USD. Peaks in liabilities are evident in late 2018, reaching as high as 3,363,400 thousand USD, and again in early 2022 around 2,698,800 thousand USD. This fluctuation points to varying obligations or short-term debt levels, potentially influenced by strategic financing decisions or payables management.

Current Ratio

The current ratio demonstrates corresponding shifts, reflecting the interplay between current assets and liabilities. The ratio fluctuated between a low of 1.08 in late 2018 and a peak of 2.40 in early 2021. Periods of ratio decline typically coincide with peaks in current liabilities, signaling tighter liquidity positions. Conversely, the highest observed ratio suggests a notably stronger liquidity buffer during early 2021. Post this peak, the ratio shows a decreasing trend, settling around 1.29 in the latest quarter, indicative of a more balanced or slightly tightened liquidity state.

In summary, the company’s liquidity has experienced significant variability influenced predominantly by changes in current liabilities. The periods of heightened liabilities have resulted in reduced liquidity metrics, while lower liabilities and steady current assets have strengthened the current ratio. Monitoring these trends is critical for assessing short-term financial stability and operational efficiency.

The analysis of the quarterly financial ratios and figures reveals several notable trends in liquidity and short-term financial stability over the observed periods.

Total Quick Assets

This metric shows fluctuations within a range approximately between 866,500 and 1,426,600 thousand US dollars. Initially, quick assets decreased from about 1,031,100 in mid-2017 to a low near 866,500 by early 2018, followed by a recovery trend that peaks at 1,426,600 in mid-2021. After this peak, a decline ensues with values oscillating around one million in the most recent quarters. This pattern indicates intermittent growth and retrenchment phases in liquid asset availability.

Current Liabilities

Current liabilities display significant volatility, ranging from roughly 1,269,100 to over 3,363,400 thousand US dollars. The liabilities initially remain around two million, then experience a pronounced spike reaching a peak in late 2018 of approximately 3,363,400, followed by a marked drop to as low as 1,269,100 by early 2021. Subsequent periods see an increase again, approaching levels above 2.5 million into late 2022. This variability suggests changes in short-term borrowing, payables management, or possibly seasonality effects.

Quick Ratio

The quick ratio, calculated as the proportion of quick assets to current liabilities, remains below 1.0 throughout the entire timeframe, indicating that quick assets are consistently insufficient to cover current liabilities in the short term. Values oscillate between approximately 0.29 and 0.98, with a notable uptick in early 2021 nearing parity at 0.98. However, this improvement is transient, as subsequent readings decline back to the 0.4 to 0.5 range. This pattern points to intermittent periods of improved liquidity that are not sustained over time.

Overall, the data reflect a company experiencing cyclical variations in liquidity ratios, with fluctuating quick assets and current liabilities contributing to an unstable quick ratio that generally indicates pressure on short-term liquidity. The episodic peak in the quick ratio nearing unity is the only occasion suggesting an almost balanced short-term asset-to-liability position, but this appears to be an exception rather than a sustained trend. Effective management of working capital components may be critical to enhancing stability in future periods.

The analysis of the quarterly financial data reveals several key trends in the company's liquidity position and management of current liabilities over the observed periods.

Total Cash Assets

The total cash assets exhibit significant volatility throughout the periods. The amounts fluctuate notably from a low point near $81.3 million to peaks approaching or exceeding $500 million in some quarters. A noteworthy peak occurs in February 2021, with cash assets reaching approximately $460.6 million, followed closely by $503.8 million in May 2021. This suggests intermittent large cash inflows or liquidity events. However, other quarters show a decline or stabilization at lower levels, indicating variability in cash availability.

Current Liabilities

Current liabilities also demonstrate considerable variation across the quarters. The amounts range generally between $1.26 billion and $3.36 billion. A pronounced spike appears in November 2018, reaching approximately $3.36 billion, followed by another high level in subsequent quarters. Later periods show fluctuations but remain elevated near the $2.3 billion to $2.7 billion range, reflecting considerable short-term obligations. There is no clear trend of consistent increase or decrease but rather a pattern of sharp rises and falls, indicating possible changes in working capital management or short-term financing needs.

Cash Ratio

The cash ratio, which measures the company's ability to cover current liabilities with its most liquid assets, remains consistently low throughout the periods. Most values range from 0.03 to 0.07, indicating that cash assets cover only a small fraction of current liabilities. An exception is seen in February 2021 and May 2021, where the cash ratio rises markedly to 0.36 and 0.24 respectively, coinciding with peaks in cash assets. Despite these temporary improvements, the ratio quickly returns to lower levels, suggesting a continued reliance on other sources of liquidity beyond cash reserves.

In summary, the financial data reflects a company experiencing substantial fluctuations in its cash holdings and current liabilities. Although episodic increases in cash reserves temporarily improve liquidity ratios, the overall trend shows a relatively low cash coverage of current liabilities. This pattern may warrant attention to liquidity management and short-term financial strategy to ensure stable operational funding and risk mitigation.