Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
EMC Corp., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
- Current Ratio
- The current ratio exhibits moderate fluctuations within the observed period. Initially, it decreased slightly from 1.27 to 1.15 in late 2012, indicating a minor reduction in short-term liquidity. Subsequently, there was a noticeable improvement during mid-2013, peaking at 1.63, suggesting enhanced capability to meet current liabilities. After this peak, the ratio gradually decreased to just above 1.1 by late 2015, reflecting a tightening in liquidity. However, in the first half of 2016, the ratio rose again, reaching 1.45, indicating strengthening liquidity conditions.
- Quick Ratio
- The quick ratio closely mirrors the trend of the current ratio but with slightly lower values, consistent with the exclusion of inventory from current assets. The ratio declined from 1.01 to 0.89 in late 2012, then increased sharply to a peak of 1.37 in mid-2013. A gradual decline followed, reaching a low of 0.88 by late 2015, suggesting reduced liquid assets relative to current liabilities during this period. Notably, a recovery phase is observed in early 2016, with the quick ratio improving to 1.29, reflecting enhanced liquid asset coverage.
- Cash Ratio
- The cash ratio shows a more pronounced volatility compared to the other liquidity ratios. Starting from 0.71 in early 2012, it experienced a consistent decline to 0.56 by late 2012, indicating a lower proportion of cash and cash equivalents relative to current liabilities. A significant increase occurred in mid-2013, peaking at 1.06, suggesting a strong liquidity position focused on cash availability. This level was not sustained, and the ratio dropped again to about 0.62 in late 2015. The ratio then improved steadily in early 2016, reaching 1.03, signaling an increase in cash reserves relative to current liabilities.
- Overall Liquidity Trends
- All liquidity ratios exhibit a similar pattern characterized by a dip in late 2012, a substantial improvement in mid-2013, followed by a decline towards late 2015, and a recovery starting in early 2016. This pattern points to cyclical liquidity management, possibly influenced by operational and market conditions. The peak in 2013 across all three ratios indicates a period of robust liquidity, while the subsequent troughs suggest tighter liquidity positions. The recovery phase in 2016 implies efforts to enhance liquidity again, with increasing cash and liquid asset levels relative to current liabilities.
Current Ratio
EMC Corp., current ratio calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Current assets | 16,550) | 14,600) | 15,063) | 13,737) | 14,087) | 12,563) | 15,733) | 14,419) | 13,945) | 14,195) | 17,278) | 16,447) | 17,174) | 12,049) | 12,209) | 11,111) | 10,935) | 11,300) | ||||||
| Current liabilities | 11,403) | 11,286) | 12,885) | 12,311) | 12,507) | 10,481) | 11,710) | 10,135) | 9,890) | 9,365) | 11,799) | 10,759) | 10,509) | 9,956) | 10,304) | 9,669) | 9,193) | 8,887) | ||||||
| Liquidity Ratio | ||||||||||||||||||||||||
| Current ratio1 | 1.45 | 1.29 | 1.17 | 1.12 | 1.13 | 1.20 | 1.34 | 1.42 | 1.41 | 1.52 | 1.46 | 1.53 | 1.63 | 1.21 | 1.18 | 1.15 | 1.19 | 1.27 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Current Ratio, Competitors2 | ||||||||||||||||||||||||
| Advanced Micro Devices Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Analog Devices Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Applied Materials Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Broadcom Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Intel Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| KLA Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lam Research Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Micron Technology Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| NVIDIA Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Qualcomm Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Texas Instruments Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Current ratio = Current assets ÷ Current liabilities
= 16,550 ÷ 11,403 = 1.45
2 Click competitor name to see calculations.
Over the observed periods, trends in current assets and current liabilities exhibit notable fluctuations influencing the liquidity position as reflected in the current ratio.
- Current Assets
- Current assets showed a general upward movement with some variability. Starting at 11,300 million USD at the end of March 2012, the figure increased to a peak of 17,278 million USD by December 2013. Following this peak, assets decreased somewhat, fluctuating around the 14,000 to 15,000 million USD range until mid-2016. Overall, current assets demonstrated expansion, suggesting an increase in liquid resources and short-term assets over time, although the growth was not consistently steady.
- Current Liabilities
- Current liabilities followed an increasing trend as well, starting from 8,887 million USD in March 2012 and rising steadily to a high of 12,885 million USD by December 2015. Post this period, current liabilities slightly decreased to around 11,403 million USD by June 2016. The upward trend in liabilities indicates an increase in short-term obligations, which may put pressure on liquidity despite asset growth.
- Current Ratio
- The current ratio, an indicator of short-term financial health, fluctuated throughout the periods. It began at 1.27 and initially declined to a low of 1.12 by September 2015. This decline corresponds with rising current liabilities and relatively slower growth in current assets during that time. Subsequently, the ratio improved to 1.45 by June 2016. Peaks in the ratio coincided with periods when current assets increased more substantially than current liabilities, such as mid-2013 and mid-2016.
In summary, the company's liquidity profile showed variability influenced by the interplay between growing current assets and increasing current liabilities. While current assets generally increased, the simultaneous rise in liabilities constrained the improvement of the current ratio at times. However, the gradual recovery of the current ratio towards the end of the period suggests a strengthening short-term financial position.
Quick Ratio
EMC Corp., quick ratio calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Cash and cash equivalents | 9,354) | 7,224) | 6,549) | 5,324) | 5,803) | 4,388) | 6,343) | 6,055) | 5,687) | 6,291) | 7,891) | 7,155) | 7,526) | 5,304) | 4,754) | 4,161) | 3,993) | 4,671) | ||||||
| Short-term investments | 2,407) | 2,577) | 2,726) | 2,318) | 1,939) | 2,062) | 1,978) | 2,092) | 1,962) | 1,964) | 2,773) | 3,442) | 3,620) | 1,223) | 1,413) | 1,285) | 1,660) | 1,668) | ||||||
| Accounts and notes receivable, less allowance for doubtful accounts | 2,896) | 2,941) | 3,977) | 3,134) | 3,345) | 2,966) | 4,413) | 3,185) | 3,344) | 2,981) | 3,861) | 2,934) | 3,204) | 2,784) | 3,433) | 3,164) | 2,974) | 2,662) | ||||||
| Total quick assets | 14,657) | 12,742) | 13,252) | 10,776) | 11,087) | 9,416) | 12,734) | 11,332) | 10,993) | 11,236) | 14,525) | 13,531) | 14,350) | 9,312) | 9,601) | 8,610) | 8,627) | 9,001) | ||||||
| Current liabilities | 11,403) | 11,286) | 12,885) | 12,311) | 12,507) | 10,481) | 11,710) | 10,135) | 9,890) | 9,365) | 11,799) | 10,759) | 10,509) | 9,956) | 10,304) | 9,669) | 9,193) | 8,887) | ||||||
| Liquidity Ratio | ||||||||||||||||||||||||
| Quick ratio1 | 1.29 | 1.13 | 1.03 | 0.88 | 0.89 | 0.90 | 1.09 | 1.12 | 1.11 | 1.20 | 1.23 | 1.26 | 1.37 | 0.94 | 0.93 | 0.89 | 0.94 | 1.01 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Quick Ratio, Competitors2 | ||||||||||||||||||||||||
| Advanced Micro Devices Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Analog Devices Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Applied Materials Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Broadcom Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Intel Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| KLA Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lam Research Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Micron Technology Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| NVIDIA Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Qualcomm Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Texas Instruments Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 14,657 ÷ 11,403 = 1.29
2 Click competitor name to see calculations.
The financial data reveals several key trends regarding the company's liquidity over the observed periods. Total quick assets experienced fluctuations, showing a general tendency to grow over time despite periods of decline. Early data points record values just above 8,600 million US dollars, with a notable increase in mid-2013 reaching above 14,000 million US dollars. After some fluctuations around the 11,000 to 13,000 million range during 2014 and 2015, quick assets rose again in 2016, peaking near 14,657 million US dollars by mid-2016.
Current liabilities illustrate a more variable trend with frequent increases and decreases throughout the timeline. Starting at around 8,887 million US dollars in early 2012, liabilities climbed steadily to almost 11,799 million by the end of 2013, followed by moderate declines and increases persisting through 2014 and 2015. The liabilities measured near 11,403 million US dollars by mid-2016, showing some stabilization after prior volatility.
The quick ratio, a critical indicator of short-term liquidity, demonstrates periods of both strength and relative weakness. Initially close to 1.0 in early 2012, the ratio dipped below the threshold of 1.0 through late 2012 and early 2013, indicating potential liquidity strain at those times. A significant improvement occurred mid-2013 when the ratio rose sharply above 1.2, maintaining levels generally above 1.1 until late 2014. However, during most of 2015, the quick ratio fell below 1.0, signaling decreased liquidity cushion. Entering 2016, the quick ratio rebounded notably, rising back above 1.1 and nearing 1.3 by the latest period observed.
Overall, the analysis suggests the company faced intermittent liquidity pressures, particularly evident during certain quarters of 2012, 2013, and 2015. The recovery in quick assets and improvement in the quick ratio in 2016 points to enhanced liquidity management or favorable operational conditions. Stability in current liabilities toward the later periods further supports this positive trend in short-term financial health.
Cash Ratio
EMC Corp., cash ratio calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Cash and cash equivalents | 9,354) | 7,224) | 6,549) | 5,324) | 5,803) | 4,388) | 6,343) | 6,055) | 5,687) | 6,291) | 7,891) | 7,155) | 7,526) | 5,304) | 4,754) | 4,161) | 3,993) | 4,671) | ||||||
| Short-term investments | 2,407) | 2,577) | 2,726) | 2,318) | 1,939) | 2,062) | 1,978) | 2,092) | 1,962) | 1,964) | 2,773) | 3,442) | 3,620) | 1,223) | 1,413) | 1,285) | 1,660) | 1,668) | ||||||
| Total cash assets | 11,761) | 9,801) | 9,275) | 7,642) | 7,742) | 6,450) | 8,321) | 8,147) | 7,649) | 8,255) | 10,664) | 10,597) | 11,146) | 6,528) | 6,167) | 5,446) | 5,653) | 6,339) | ||||||
| Current liabilities | 11,403) | 11,286) | 12,885) | 12,311) | 12,507) | 10,481) | 11,710) | 10,135) | 9,890) | 9,365) | 11,799) | 10,759) | 10,509) | 9,956) | 10,304) | 9,669) | 9,193) | 8,887) | ||||||
| Liquidity Ratio | ||||||||||||||||||||||||
| Cash ratio1 | 1.03 | 0.87 | 0.72 | 0.62 | 0.62 | 0.62 | 0.71 | 0.80 | 0.77 | 0.88 | 0.90 | 0.98 | 1.06 | 0.66 | 0.60 | 0.56 | 0.61 | 0.71 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Cash Ratio, Competitors2 | ||||||||||||||||||||||||
| Advanced Micro Devices Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Analog Devices Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Applied Materials Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Broadcom Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Intel Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| KLA Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lam Research Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Micron Technology Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| NVIDIA Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Qualcomm Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Texas Instruments Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 11,761 ÷ 11,403 = 1.03
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets exhibit a fluctuating trend over the observed periods. Initially, cash assets decline from 6,339 million USD in March 2012 to 5,446 million USD in September 2012, followed by a recovery reaching a peak of 11,146 million USD in June 2013. Subsequently, cash assets decrease again, reaching a low of 6,450 million USD in March 2015. From that point onward, a clear upward trend emerges, culminating in the highest recorded value of 11,761 million USD by June 2016. This pattern indicates periods of cash accumulation interspersed with drawdowns, with an overall tendency toward growth in the latter part of the timeline.
- Current Liabilities
- Current liabilities generally show an increasing trend from 8,887 million USD in March 2012 to a peak of 12,885 million USD in December 2015. Notably, there is a pronounced escalation between June 2014 and June 2015, where liabilities rise from 9,890 million USD to 12,507 million USD. After December 2015, there is a slight reduction in current liabilities, falling to approximately 11,403 million USD by June 2016. This progression suggests increasing short-term financial obligations with some relief toward the end of the period.
- Cash Ratio
- The cash ratio, a measure of liquidity calculated as cash assets divided by current liabilities, displays considerable variation throughout the periods. It starts at 0.71 in March 2012, dips to its lowest point of 0.56 in September 2012, then markedly increases to a high of 1.06 in June 2013, indicating more than sufficient liquid assets relative to current liabilities during that quarter. The ratio then declines steadily to around 0.62 in the middle quarters of 2015, signifying tighter liquidity. In the last periods recorded, there is a recovery to 1.03 by June 2016, indicating improved liquidity conditions. Overall, despite fluctuations, the company maintains a cash ratio near or above 0.6, with occasional periods of stronger liquidity exceeding 1.0.
- Summary Insights
- The financial data reveal cyclical patterns in liquidity and short-term obligations. There is evidence of aggressive cash accumulation leading to peaks in cash assets, coupled with periods of increasing current liabilities. The liquidity position, as measured by the cash ratio, reflects these dynamics with corresponding rises and falls. The company demonstrates the ability to restore robust liquidity following phases of contraction, particularly evident in the latter quarters where cash assets and the cash ratio experience significant improvement. The interplay between escalating current liabilities and fluctuating cash assets underscores the necessity for ongoing monitoring of working capital management.