Freeport-McMoRan Inc. (NYSE:FCX)

The analysis of liquidity ratios over the multiple quarterly periods reveals several key trends in the company's short-term financial health.

Current ratio

The current ratio shows a generally stable pattern with fluctuations between 2.3 and 2.9 across the timeline. Initially, from the first quarter of 2020 through late 2020, there is a gradual improvement from 2.34 to a peak of 2.72. Following this, the ratio declines somewhat in early 2021 but recovers towards the end of that year. The early parts of 2022 and 2023 reflect higher values near or above 2.7, indicating relatively strong liquidity. However, a downward trend is observable from the first quarter of 2023 onwards, with the ratio decreasing back closer to 2.3–2.4 by the first quarter of 2025. Overall, the current ratio remains above 2.3, suggesting sufficient coverage of current liabilities by current assets.

Quick ratio

The quick ratio exhibits a notable increasing trend between early 2020 and late 2020, moving from 0.86 to 1.48. This growth period reflects enhanced liquidity in more liquid assets relative to current liabilities. In 2021, this ratio remains relatively high, fluctuating mostly above 1.4 and peaking at 1.66, but in 2022 it begins a gradual decline. Throughout 2023 and into 2024 and early 2025, the quick ratio trends downward steadily from approximately 1.62 to about 1.04. The ongoing decrease may suggest a reduction in liquid assets or an increase in current liabilities that quickly payable assets cannot cover as comfortably as before.

Cash ratio

The cash ratio shows the most pronounced increase during 2020, rising from 0.51 to a peak of 1.07 by year-end, indicating a substantial build-up in cash and cash equivalents relative to current liabilities. In 2021, this ratio remains strong, frequently above 1.1 and reaching up to 1.39, but then it experiences some volatility with slight declines and partial recoveries. From 2022 onward, a downward trend takes hold more persistently, shifting from around 1.6 in mid-2022 to 0.82 by the first quarter of 2025. This consistent decrease points to reduced cash reserves relative to current liabilities, which may affect the most immediate liquidity position of the company.

Collectively, these ratios suggest that the company maintained a relatively healthy liquidity position through 2020 and much of 2021, with all three ratios generally improving. However, from 2022 onwards, there is a discernible decline in liquidity metrics, especially in terms of quick and cash ratios. This decline indicates that while the company still covers its short-term obligations, it is doing so with a smaller cushion of liquid assets, which could influence responsiveness to immediate financial demands. Current assets continue to outpace current liabilities by a comfortable margin, but the narrowing liquidity margins warrant monitoring to manage short-term financial risks effectively.

Current Assets

Current assets demonstrated an overall upward trajectory from March 31, 2020, to March 31, 2025. Starting at $7,357 million, they increased steadily, peaking around $16,182 million in June 30, 2022. Following this peak, current assets generally declined with some fluctuations, reaching $13,802 million by March 31, 2025. This pattern suggests initial growth possibly related to operational expansion or increased liquidity, followed by a moderation in asset holdings in the later periods.

Current Liabilities

Current liabilities exhibited a rising trend between March 31, 2020, and December 31, 2021, increasing from $3,143 million to $5,892 million. Subsequently, liabilities fluctuated, hitting a high of $6,454 million in March 31, 2022, before declining to around $4,788 million at June 30, 2023. After mid-2023, current liabilities showed irregular movements, ultimately recording $5,943 million by March 31, 2025. This variability indicates changing short-term obligations, which could reflect refinancings, adjustments in payables, or operational shifts.

Current Ratio

The current ratio started relatively high at 2.34 in March 31, 2020, increasing to a peak of 2.94 in June 30, 2023. This rise points to an improvement in short-term liquidity, suggesting that current assets were maintained at levels notably higher than current liabilities during this period. However, after June 2023, the ratio declined toward 2.32 by March 31, 2025, indicating a slight decrease in liquidity cushion but still remaining above the threshold of maintaining sufficient asset coverage of liabilities. Overall, the current ratio fluctuated but retained a level indicative of financial stability throughout the periods analyzed.

Total Quick Assets

The total quick assets exhibited a generally increasing trend from March 2020 through December 2021, rising from 2,708 million USD to a peak of 9,810 million USD. Following this peak, the value fluctuated with a downward tendency, decreasing to 7,630 million USD by December 2023. The first quarter of 2024 showed some recovery, increasing to 8,480 million USD in March, but the subsequent quarters again manifested a decline, reaching 5,953 million USD by December 2024. By March 2025, the quick assets slightly increased again to 6,153 million USD.

Current Liabilities

Current liabilities initially rose sharply from 3,143 million USD in March 2020 to a high level of 5,892 million USD in December 2021. After December 2021, the liabilities decreased significantly to 4,788 million USD in June 2023 but showed increased volatility thereafter. By December 2023, liabilities had surged to 5,815 million USD, followed by fluctuations around the 6,000 million USD mark through to March 2025, ending at 5,943 million USD.

Quick Ratio

The quick ratio demonstrated a marked improvement between March 2020 and December 2020, climbing from 0.86 to 1.48, indicating enhanced liquidity. This favorable trend continued, peaking at 1.66 in both September and December 2021. From 2022 onwards, the quick ratio experienced a gradual decline with periodic fluctuations, dropping to 1.31 by December 2023. Subsequent quarters showed further decreases, with the ratio falling to approximately 1.04 by March 2025. Despite this decline, the quick ratio remained above 1.0 in all periods after mid-2020, suggesting the company maintained sufficient liquid assets relative to current liabilities, though the trend points to a weakening liquidity position in the most recent periods.

Total cash assets

The total cash assets exhibit a generally upward trend from March 31, 2020, through June 30, 2022, increasing from $1,602 million to a peak around $9,492 million. After this peak, cash assets demonstrate a gradual decline with minor fluctuations, decreasing to $4,845 million by March 31, 2025. The highest values are observed in 2021 and early 2022, after which a consistent reduction is noted through the remaining periods.

Current liabilities

Current liabilities show an overall increasing trend from $3,143 million in March 31, 2020, to $6,454 million by March 31, 2022. Following this peak, there is a notable decrease and fluctuation, with liabilities dropping to $4,788 million by June 30, 2023, then rising again to around $6,247 million by September 30, 2024, before slightly decreasing to $5,943 million by March 31, 2025. The pattern indicates volatility in liabilities, with periods of increase followed by moderate reductions.

Cash ratio

The cash ratio improves significantly from 0.51 at March 31, 2020, to a high of approximately 1.6 by June 30, 2022, reflecting a stronger liquidity position relative to current liabilities during this period. After the mid-2022 peak, the cash ratio declines steadily, falling below 1.0 starting from December 31, 2023, and reaching 0.82 by March 31, 2025. This trend suggests a weakening liquidity status in the most recent periods.

Summary of trends and insights

The data portrays a period of increasing liquidity and cash reserves through early 2022, supported by rising cash assets and a corresponding growth in cash ratio above 1.0, indicating that cash assets exceeded current liabilities during that time. Conversely, following this period, both cash assets and cash ratio decline, signaling a reduction in readily available cash relative to short-term obligations. Current liabilities fluctuate but remain at elevated levels, placing pressure on liquidity metrics. These shifts could imply changes in operational cash flows, investing activities, or strategic financial management affecting the company’s short-term financial flexibility.