Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Hershey Co., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2023-07-02), 10-Q (reporting date: 2023-04-02), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-10-02), 10-Q (reporting date: 2022-07-03), 10-Q (reporting date: 2022-04-03), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-10-03), 10-Q (reporting date: 2021-07-04), 10-Q (reporting date: 2021-04-04), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-27), 10-Q (reporting date: 2020-06-28), 10-Q (reporting date: 2020-03-29), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-29), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
- Current Ratio
- The current ratio exhibited considerable fluctuations over the analyzed periods. Starting below 1 at 0.92, it declined to a low of 0.80 by late 2019, then increased significantly reaching a peak of 1.61 in early 2021. This upward trend suggests an improvement in short-term liquidity during that time. However, following this peak, the ratio dropped sharply to 0.90 by the end of 2021 and remained relatively lower but steady around 0.74 to 0.83 through 2022 and into mid-2023. The most recent data point shows a recovery to 1.06, indicating a modest restoration of liquidity.
- Quick Ratio
- The quick ratio demonstrated a similar pattern to the current ratio but with lower absolute values, reflecting a more conservative measure of liquidity. It initially remained below 0.5 until early 2019, then saw a gradual increase through 2020, reaching a peak of 1.00 in early 2021. Subsequently, a sharp decline occurred, dropping the ratio back below 0.5 by late 2021 and holding near that level throughout 2022. Slight improvement is noted more recently with values rising towards 0.44 by mid-2023, suggesting an incremental strengthening of liquid assets beyond inventory.
- Cash Ratio
- The cash ratio followed a notable upward trend from 0.19 in early 2019 to a peak of 0.64 in early 2021, reflecting increased availability of cash and cash equivalents relative to current liabilities. After this peak, the ratio quickly contracted, reaching lows around 0.10 to 0.14 throughout 2022 and early 2023. The most recent measure shows a slight recovery to 0.16. Overall, the cash ratio exhibited higher volatility and sensitivity compared to the other liquidity metrics, indicating fluctuating cash holdings.
- Summary of Liquidity Trends
- The data indicates that liquidity ratios of the company improved significantly through 2020 into early 2021, with all three key ratios (current, quick, and cash) reaching their respective peaks, likely reflecting enhanced working capital management or increased short-term asset holdings. However, this improvement was not sustained, as all ratios declined sharply after early 2021, dropping to or below pre-2019 levels by late 2022. The recent figures suggest tentative improvements in liquidity but remain below the peak values observed. These fluctuations highlight periods of varying short-term financial flexibility.
Current Ratio
Hershey Co., current ratio calculation (quarterly data)
| Jul 2, 2023 | Apr 2, 2023 | Dec 31, 2022 | Oct 2, 2022 | Jul 3, 2022 | Apr 3, 2022 | Dec 31, 2021 | Oct 3, 2021 | Jul 4, 2021 | Apr 4, 2021 | Dec 31, 2020 | Sep 27, 2020 | Jun 28, 2020 | Mar 29, 2020 | Dec 31, 2019 | Sep 29, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||
| Current assets | 2,880,905) | 2,726,100) | 2,620,406) | 2,692,734) | 2,428,465) | 2,457,438) | 2,246,206) | 2,741,944) | 2,219,181) | 2,860,024) | 2,977,905) | 3,207,096) | 2,902,944) | 2,854,753) | 2,117,102) | 2,375,055) | 2,093,558) | 2,216,929) | ||||||
| Current liabilities | 2,726,057) | 3,281,348) | 3,257,154) | 3,388,614) | 3,300,910) | 2,565,637) | 2,493,313) | 1,906,495) | 1,587,002) | 1,774,632) | 1,891,745) | 2,228,193) | 2,214,818) | 2,892,799) | 2,008,793) | 2,982,374) | 2,387,427) | 2,398,185) | ||||||
| Liquidity Ratio | ||||||||||||||||||||||||
| Current ratio1 | 1.06 | 0.83 | 0.80 | 0.79 | 0.74 | 0.96 | 0.90 | 1.44 | 1.40 | 1.61 | 1.57 | 1.44 | 1.31 | 0.99 | 1.05 | 0.80 | 0.88 | 0.92 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Current Ratio, Competitors2 | ||||||||||||||||||||||||
| Coca-Cola Co. | 1.14 | 1.15 | 1.15 | 1.13 | 1.13 | 1.18 | 1.13 | 1.52 | 1.47 | 1.33 | — | — | — | — | — | — | — | — | ||||||
| Mondelēz International Inc. | 0.65 | 0.68 | 0.60 | 0.69 | 0.68 | 0.68 | 0.74 | 0.73 | 0.61 | 0.61 | — | — | — | — | — | — | — | — | ||||||
| PepsiCo Inc. | 0.84 | 0.87 | 0.80 | 0.92 | 0.83 | 0.87 | 0.83 | 0.95 | 0.91 | 0.93 | — | — | — | — | — | — | — | — | ||||||
| Philip Morris International Inc. | 0.85 | 0.85 | 0.72 | 0.92 | 0.89 | 0.92 | 0.92 | 1.00 | 1.18 | 1.18 | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2023-07-02), 10-Q (reporting date: 2023-04-02), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-10-02), 10-Q (reporting date: 2022-07-03), 10-Q (reporting date: 2022-04-03), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-10-03), 10-Q (reporting date: 2021-07-04), 10-Q (reporting date: 2021-04-04), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-27), 10-Q (reporting date: 2020-06-28), 10-Q (reporting date: 2020-03-29), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-29), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q2 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= 2,880,905 ÷ 2,726,057 = 1.06
2 Click competitor name to see calculations.
- Current Assets
- Current assets exhibited notable fluctuations across the reported quarters. Initially, there was a slight decline from the first quarter of 2019 to mid-2019, followed by a recovery and growth peaking in the third quarter of 2020. Subsequently, a general downward trend was observed through 2021, with some variability. In 2022 and into mid-2023, current assets displayed moderate recovery with periods of increase, signaling some stabilization in liquidity levels.
- Current Liabilities
- Current liabilities demonstrated considerable volatility during the period. The liabilities started relatively high in early 2019 and peaked notably in the third quarter of 2019. Following this peak, a decreasing trend occurred into 2020, with some quarters showing significant drops. However, from late 2021 through 2022, liabilities surged again, reaching their highest levels in mid-2022. In 2023, a decrease is visible, indicating an effort toward liability management.
- Current Ratio
- The current ratio, reflecting short-term liquidity, revealed several distinct phases. In 2019, it mostly remained below 1, indicating potential liquidity pressure, with a recovery toward the end of the year. During 2020, the current ratio improved substantially, rising above 1 and peaking near 1.6 at year-end, suggestive of strengthened liquidity. However, this improvement was temporary, as the ratio declined sharply throughout 2021 and 2022, dropping below 1 again and reflecting reduced short-term financial stability. The early part of 2023 shows a gradual return to a ratio slightly above 1, implying a cautious improvement in current asset coverage of liabilities.
- Overall Analysis
- The data portray a company facing ongoing challenges in managing liquidity, with substantial variability in both assets and liabilities. The peak current ratios during 2020 suggest a period of relatively strong liquidity management or enhancements in working capital. However, subsequent declines indicate renewed pressures or changes in operational or financial conditions affecting short-term solvency. The slight improvement in the current ratio in early 2023 may reflect strategic adjustments or recovery efforts. Continued monitoring of the relationship between current assets and liabilities is advisable to ensure adequate liquidity and mitigate financial risk.
Quick Ratio
Hershey Co., quick ratio calculation (quarterly data)
| Jul 2, 2023 | Apr 2, 2023 | Dec 31, 2022 | Oct 2, 2022 | Jul 3, 2022 | Apr 3, 2022 | Dec 31, 2021 | Oct 3, 2021 | Jul 4, 2021 | Apr 4, 2021 | Dec 31, 2020 | Sep 27, 2020 | Jun 28, 2020 | Mar 29, 2020 | Dec 31, 2019 | Sep 29, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||
| Cash and cash equivalents | 446,161) | 460,346) | 463,889) | 327,741) | 339,722) | 338,055) | 329,266) | 675,516) | 426,201) | 1,132,242) | 1,143,987) | 1,205,889) | 1,165,331) | 1,094,796) | 493,262) | 302,636) | 365,963) | 465,965) | ||||||
| Accounts receivable, trade, net | 764,269) | 856,841) | 711,203) | 929,482) | 654,399) | 868,426) | 671,464) | 841,227) | 532,401) | 634,830) | 615,233) | 829,513) | 540,398) | 705,639) | 568,509) | 849,218) | 538,746) | 694,136) | ||||||
| Total quick assets | 1,210,430) | 1,317,187) | 1,175,092) | 1,257,223) | 994,121) | 1,206,481) | 1,000,730) | 1,516,743) | 958,602) | 1,767,072) | 1,759,220) | 2,035,402) | 1,705,729) | 1,800,435) | 1,061,771) | 1,151,854) | 904,709) | 1,160,101) | ||||||
| Current liabilities | 2,726,057) | 3,281,348) | 3,257,154) | 3,388,614) | 3,300,910) | 2,565,637) | 2,493,313) | 1,906,495) | 1,587,002) | 1,774,632) | 1,891,745) | 2,228,193) | 2,214,818) | 2,892,799) | 2,008,793) | 2,982,374) | 2,387,427) | 2,398,185) | ||||||
| Liquidity Ratio | ||||||||||||||||||||||||
| Quick ratio1 | 0.44 | 0.40 | 0.36 | 0.37 | 0.30 | 0.47 | 0.40 | 0.80 | 0.60 | 1.00 | 0.93 | 0.91 | 0.77 | 0.62 | 0.53 | 0.39 | 0.38 | 0.48 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Quick Ratio, Competitors2 | ||||||||||||||||||||||||
| Coca-Cola Co. | 0.82 | 0.81 | 0.77 | 0.80 | 0.78 | 0.80 | 0.81 | 1.17 | 1.12 | 0.99 | — | — | — | — | — | — | — | — | ||||||
| Mondelēz International Inc. | 0.25 | 0.29 | 0.30 | 0.35 | 0.32 | 0.35 | 0.42 | 0.43 | 0.30 | 0.32 | — | — | — | — | — | — | — | — | ||||||
| PepsiCo Inc. | 0.60 | 0.61 | 0.58 | 0.68 | 0.59 | 0.63 | 0.56 | 0.65 | 0.66 | 0.68 | — | — | — | — | — | — | — | — | ||||||
| Philip Morris International Inc. | 0.37 | 0.31 | 0.29 | 0.48 | 0.47 | 0.44 | 0.44 | 0.49 | 0.59 | 0.53 | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2023-07-02), 10-Q (reporting date: 2023-04-02), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-10-02), 10-Q (reporting date: 2022-07-03), 10-Q (reporting date: 2022-04-03), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-10-03), 10-Q (reporting date: 2021-07-04), 10-Q (reporting date: 2021-04-04), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-27), 10-Q (reporting date: 2020-06-28), 10-Q (reporting date: 2020-03-29), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-29), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q2 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 1,210,430 ÷ 2,726,057 = 0.44
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several important trends regarding the liquidity and short-term financial position over the observed periods.
- Total Quick Assets
- Total quick assets have shown notable volatility throughout the timeframe. Initially, the values fluctuated moderately, with a rise from approximately 904 million to over 2 billion in 2020, indicating a period of strengthened immediate liquidity. However, after reaching peaks around late 2020 and early 2021, quick assets experienced a considerable decline in mid-2021, falling below 1 million in some quarters. Subsequently, there were attempts at recovery through 2022 and 2023, yet the levels remained below the prior peaks, exhibiting continued instability in quick asset holdings.
- Current Liabilities
- Current liabilities have also demonstrated significant fluctuations but generally remain at high levels throughout the periods. Starting around 2.4 billion, liabilities peaked multiple times, surpassing 3.3 billion in mid to late 2022, which suggests an increasing burden of short-term obligations towards the latter part of the data set. The elevated liabilities in the last few quarters imply potential liquidity pressures despite some easing in the most recent quarter, which still maintained a high absolute value of over 2.7 billion.
- Quick Ratio
- The quick ratio, a critical indicator of liquidity, exhibited considerable variability, reflecting the interplay between quick assets and current liabilities. Early periods showed a low but improving ratio rise from 0.38 to 0.93 by the end of 2020, indicative of a strengthening position to meet short-term liabilities with liquid assets. The ratio reached parity (1.0) in early 2021, signaling sufficient quick assets to cover current liabilities. However, this was followed by a sharp decline to 0.4 and lower ranges in subsequent quarters through 2022 and 2023, pointing to a weakening liquidity position. The ratio remaining below 0.5 in recent quarters suggests potential liquidity challenges in efficiently covering current liabilities with quick assets.
Overall, the data portrays an environment where liquidity, as measured by quick assets and the quick ratio, improved significantly up to early 2021 but deteriorated notably thereafter. Concurrently, current liabilities generally trended upwards, particularly in the latter half of the period, putting additional pressure on the company's short-term financial stability. The declining quick ratio in the recent quarters highlights the importance of monitoring liquidity risk and the need for strategies to enhance the ability to cover short-term obligations.
Cash Ratio
Hershey Co., cash ratio calculation (quarterly data)
| Jul 2, 2023 | Apr 2, 2023 | Dec 31, 2022 | Oct 2, 2022 | Jul 3, 2022 | Apr 3, 2022 | Dec 31, 2021 | Oct 3, 2021 | Jul 4, 2021 | Apr 4, 2021 | Dec 31, 2020 | Sep 27, 2020 | Jun 28, 2020 | Mar 29, 2020 | Dec 31, 2019 | Sep 29, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||
| Cash and cash equivalents | 446,161) | 460,346) | 463,889) | 327,741) | 339,722) | 338,055) | 329,266) | 675,516) | 426,201) | 1,132,242) | 1,143,987) | 1,205,889) | 1,165,331) | 1,094,796) | 493,262) | 302,636) | 365,963) | 465,965) | ||||||
| Total cash assets | 446,161) | 460,346) | 463,889) | 327,741) | 339,722) | 338,055) | 329,266) | 675,516) | 426,201) | 1,132,242) | 1,143,987) | 1,205,889) | 1,165,331) | 1,094,796) | 493,262) | 302,636) | 365,963) | 465,965) | ||||||
| Current liabilities | 2,726,057) | 3,281,348) | 3,257,154) | 3,388,614) | 3,300,910) | 2,565,637) | 2,493,313) | 1,906,495) | 1,587,002) | 1,774,632) | 1,891,745) | 2,228,193) | 2,214,818) | 2,892,799) | 2,008,793) | 2,982,374) | 2,387,427) | 2,398,185) | ||||||
| Liquidity Ratio | ||||||||||||||||||||||||
| Cash ratio1 | 0.16 | 0.14 | 0.14 | 0.10 | 0.10 | 0.13 | 0.13 | 0.35 | 0.27 | 0.64 | 0.60 | 0.54 | 0.53 | 0.38 | 0.25 | 0.10 | 0.15 | 0.19 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Cash Ratio, Competitors2 | ||||||||||||||||||||||||
| Coca-Cola Co. | 0.65 | 0.61 | 0.59 | 0.62 | 0.57 | 0.55 | 0.63 | 0.93 | 0.85 | 0.76 | — | — | — | — | — | — | — | — | ||||||
| Mondelēz International Inc. | 0.08 | 0.10 | 0.11 | 0.15 | 0.14 | 0.14 | 0.25 | 0.24 | 0.14 | 0.14 | — | — | — | — | — | — | — | — | ||||||
| PepsiCo Inc. | 0.22 | 0.20 | 0.20 | 0.26 | 0.21 | 0.27 | 0.23 | 0.27 | 0.24 | 0.29 | — | — | — | — | — | — | — | — | ||||||
| Philip Morris International Inc. | 0.15 | 0.11 | 0.12 | 0.26 | 0.25 | 0.23 | 0.23 | 0.25 | 0.31 | 0.26 | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2023-07-02), 10-Q (reporting date: 2023-04-02), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-10-02), 10-Q (reporting date: 2022-07-03), 10-Q (reporting date: 2022-04-03), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-10-03), 10-Q (reporting date: 2021-07-04), 10-Q (reporting date: 2021-04-04), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-27), 10-Q (reporting date: 2020-06-28), 10-Q (reporting date: 2020-03-29), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-29), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q2 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 446,161 ÷ 2,726,057 = 0.16
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets exhibit significant fluctuations over the observed periods. Initially, there was a downward trend from approximately $466 million in March 2019 to about $303 million by September 2019. This was followed by a strong recovery and peak in March 2020, reaching roughly $1.09 billion, with sustained high levels through the end of 2020. Early 2021 saw a sharp decline, dropping to around $329 million by December 2021. The cash position remained relatively stable but at a lower level through 2022 and into mid-2023, fluctuating between approximately $327 million and $463 million.
- Current Liabilities
- Current liabilities display a generally increasing trend with periodic volatility. Starting around $2.4 billion in early 2019, liabilities peaked at nearly $3.3 billion in the third quarter of 2022. There were intermittent declines, notably in late 2019 and in the first half of 2021, but the overall direction points to growth in liabilities over time. A moderate decrease is visible in mid-2023, with liabilities falling to about $2.7 billion.
- Cash Ratio
- The cash ratio, reflecting liquidity by comparing cash assets to current liabilities, shows marked variability aligned with changes in cash and liability levels. It began low at 0.19 in early 2019 and dipped to its lowest point near 0.10 in September 2019. A pronounced improvement occurred through 2020, peaking at 0.64 in early 2021, which corresponds with increased cash reserves and reduced liabilities. However, liquidity ratio sharply declined afterwards, falling back to approximately 0.10 by late 2022 and remaining subdued around 0.14 as of mid-2023, suggesting lower short-term financial flexibility.
- Overall Analysis
- The data indicate a cyclical pattern in cash holdings and liquidity, with peak cash reserves and liquidity ratios coinciding with periods of reduced current liabilities. The strong cash position in 2020 appears to be an outlier within the timeframe, potentially reflective of specific operational or financial strategies during that period. The subsequent decline in liquidity ratios and the growth in current liabilities in later years suggest increased short-term obligations that may impact financial flexibility. Maintaining a cash ratio near or below 0.15 in recent periods highlights a cautious stance or potential pressure in managing immediate liabilities.