DuPont de Nemours Inc. (NYSE:DD)

Current Ratio

The current ratio demonstrates a generally declining trend over the observed periods from March 2015 through December 2019. Initially, the ratio fluctuated around the 1.9 to 2.2 range, peaking at 2.18 in December 2015. After a period of moderate stability through 2017 and early 2018, values started to decrease more noticeably from mid-2018 onward, reaching a low of 1.2 in the final quarter of 2019. This indicates a gradual reduction in the company's short-term liquidity and its ability to cover current liabilities with current assets over the five-year span.

Quick Ratio

The quick ratio follows a somewhat similar downward trajectory as the current ratio, reflecting a decline in the company's more liquid assets relative to current liabilities. The ratio hovered around 1.2 to 1.46 in the earlier years, with the highest point observed at 1.46 in December 2015. Post-2015, the quick ratio maintained a modest decrease, punctuated by a brief increase in the first quarter of 2019 to 1.25, before continuing its descent to reach 0.64 by the end of 2019. This decreasing trend suggests a diminishing cushion of liquid assets excluding inventories.

Cash Ratio

The cash ratio exhibits the most pronounced decline among the three liquidity metrics. Beginning at 0.51 in March 2015, the ratio showed slight fluctuations but generally trended downward throughout the reporting periods. The maximum value of 0.76 was recorded in December 2015, after which the ratio steadily decreased, with intermittent minor recoveries. By December 2019, the cash ratio had dropped to 0.18, indicating a significant reduction in the company's immediate cash and cash equivalents position relative to current liabilities. This suggests a reduced capacity to satisfy short-term obligations solely with cash on hand.

Overall Insights

The analysis of the three liquidity ratios reveals a consistent trend of declining short-term financial strength over the five-year period. While the company maintained solid liquidity levels at the beginning, especially in 2015, all three ratios decreased notably by the end of 2019. This pattern may reflect changes in asset management, increased current liabilities, or strategic shifts impacting cash and liquid asset holdings. The widening gap between the current ratio and cash ratio underscores a potential reliance on inventory or receivables to meet short-term obligations rather than immediate cash availability. These trends could warrant further examination to assess liquidity risk and operational efficiency.

The analysis of the quarterly financial data reveals several trends in the company's liquidity position over the examined periods.

Current Assets

Current assets exhibited fluctuations throughout the periods. Initially, from the first quarter of 2015 through the first quarter of 2016, values remained relatively stable, ranging between approximately 23,000 and 25,000 million USD. A notable increase occurred in the third quarter of 2017, when current assets rose sharply to around 54,801 million USD, almost doubling compared to previous quarters. This elevated level of current assets slightly declined but remained significantly higher than earlier periods until the first quarter of 2019. From mid-2019 onwards, there is a pronounced decrease, with current assets dropping below 11,000 million USD.

Current Liabilities

Current liabilities generally increased moderately from early 2015 through 2017, moving from approximately 12,000 million USD to around 27,000 million USD in the third quarter of 2017. Like current assets, there is a substantial decrease in liabilities during the subsequent quarters, reaching around 6,457 million USD in mid-2019, before a slight rise to about 8,346 million USD by the end of 2019.

Current Ratio

The current ratio started near 2.0 in early 2015, indicating a healthy liquidity position. The ratio remained largely stable around this level through 2017, despite fluctuations in absolute asset and liability values. After mid-2017, the ratio gradually declined from around 2.01 to 1.2 by the last quarter of 2019. This reduction signifies a weakening in short-term liquidity, partially explained by the sharper decrease in current assets relative to current liabilities towards the end of the observed period.

Overall, the data indicates a period of heightened liquidity around 2017 with substantial increases in current assets and liabilities. However, the trend reverses towards the end of 2018 and throughout 2019, where both current assets and liabilities contract considerably, and the current ratio trends downward, reflecting a potential tightening of liquidity conditions.

The analysis of the quarterly financial data reveals several notable trends and fluctuations in the liquidity position over the observed periods.

Total Quick Assets

Total quick assets exhibit a generally stable pattern from March 2015 through June 2017, maintaining values approximately between $15 billion and $17 billion. A significant increase is observed starting September 2017 and December 2017, where the figures more than double, rising sharply to over $31 billion. Post this surge, there is a gradual decline in total quick assets until December 2018, followed by another rise and then a sharp decrease beginning March 2019 through to December 2019, reaching levels below $6 billion.

Current Liabilities

Current liabilities show an increasing trend from March 2015 to September 2017, rising from approximately $12.4 billion to over $27 billion, almost doubling during this span. A slight fluctuation continues with values stabilizing around $26 billion to $28 billion up to December 2018. However, starting in March 2019, current liabilities suddenly decrease dramatically, falling to values below $8.5 billion by December 2019.

Quick Ratio

The quick ratio, representing liquidity status, fluctuates within a moderate range between 1.14 and 1.46 from March 2015 through December 2017, consistently maintaining a value above 1. This indicates a comfortable liquidity position during this period. From March 2018 onward, a downward trend appears, with the quick ratio dipping below 1 starting in March 2018, signaling potential liquidity tightening. It further declines to a low of 0.64 by December 2019, reflecting a weakened short-term liquidity position.

In summary, the data indicates that while the company maintained a solid liquidity position up to late 2017, there were substantial increases in both quick assets and current liabilities during that period. Following this, the liquidity has deteriorated markedly starting in 2018, as evidenced by the quick ratio falling below 1 and continuing to decline into 2019. The sharp fluctuations in total quick assets and current liabilities in 2017 and 2019 suggest possible one-time events or structural changes impacting working capital management, which warrants further investigation.

Total cash assets

Over the examined periods, total cash assets exhibit notable fluctuations. Initially, cash assets were relatively stable around the 6,200 to 8,500 million US$ range through 2015 and 2016. The beginning of 2017 shows a significant spike, peaking at nearly 15,000 million US$ in the third quarter, which represents a marked increase compared to prior periods. Subsequent quarters in 2017 maintained elevated cash levels around 14,000 million US$, followed by a gradual decline throughout 2018, dropping back to approximately 7,300 million US$ by the last quarter. In 2019, cash assets experienced further volatility, decreasing sharply to below 2,000 million US$ before a slight recovery to around 1,500 million US$ at year-end. This pattern suggests episodic liquidity inflows followed by systematic reductions.

Current liabilities

Current liabilities display a generally rising trend from early 2015 through late 2017, increasing from approximately 12,000 million US$ to more than 27,000 million US$, with particular jumps observed in 2017. This upward trajectory indicates growing short-term obligations over the period. From 2018 onwards, current liabilities level off near 27,000 to 28,000 million US$, before experiencing a steep decline in 2019 to values between 6,000 and 8,000 million US$, reflecting a significant reduction in immediate liabilities toward the end of the analysis period.

Cash ratio

The cash ratio, which measures liquidity by comparing cash assets to current liabilities, mirrors the trends in cash and liabilities. It started at moderate levels around 0.5 in 2015, improving slightly to above 0.7 at the end of 2015. Subsequently, the ratio declined through 2016 and reached lower levels between 0.4 and 0.55 during 2017 and early 2018. A notable downward trend is evident during 2018, reaching a low of approximately 0.26 by the end of the year. The ratio briefly recovered to around 0.55 in early 2019, before falling again, hitting a low of 0.18 by the last quarter. This overall decrease suggests a reduction in the buffer of readily available cash against immediate liabilities, highlighting potential liquidity pressures especially in late 2018 and 2019.

Summary

The financial data reveals significant liquidity volatility over the four-year timeframe. The company experienced periods of strong cash accumulation, particularly in 2017, followed by substantial declines. Current liabilities generally increased until 2017, before contracting sharply in 2019. The cash ratio's fluctuations indicate varying liquidity management effectiveness, with a troubling decline toward the end of the period implying tighter liquidity. These patterns underscore the need for ongoing liquidity monitoring to ensure the company maintains adequate liquid resources relative to its short-term obligations.