Kimberly-Clark Corp. (NYSE:KMB)

Current Ratio Analysis

The current ratio exhibits a generally fluctuating pattern over the observed periods. Initially, it starts below 1.0, indicating potential liquidity constraints, with values hovering slightly under 0.9 in early 2017. A downward trend is noted through 2018, reaching a low point around 0.73 to 0.75. However, some improvement occurs during 2020, peaking at 1.0 in the third quarter, before dipping again to approximately 0.77 by the first quarter of 2021. Overall, the current ratio demonstrates variability with periods of both weakening and moderate strengthening in short-term liquidity.

Quick Ratio Analysis

The quick ratio follows a similar declining trend from early 2017 through 2019, starting at approximately 0.52 and declining to near 0.39 by the end of 2019. A slight recovery is evident in 2020, reaching as high as 0.6 in the third quarter, indicating a temporary improvement in the company's immediate liquidity when excluding inventories. However, this is followed by a sharp decline back to values around 0.38 by early 2021. The data suggests intermittent liquidity pressure when considering only the most liquid assets.

Cash Ratio Analysis

The cash ratio remains consistently low throughout the periods analyzed, generally fluctuating between 0.05 and 0.25. Notable is a rise during 2020, where the ratio increases to 0.25 in the third quarter, indicating a momentary strengthening of cash and cash equivalents relative to current liabilities. Prior to and subsequent to this period, the cash ratio remains at the lower end, often around 0.05 to 0.08, signaling limited cash reserves relative to short-term obligations.

Overall Liquidity Insights

The overall liquidity position, as reflected by the three ratios, reveals periods of tightening and improvement but generally indicates limited short-term asset coverage for liabilities. The current ratio staying below or around 1.0 for most periods suggests a marginal buffer. Meanwhile, lower quick and cash ratios highlight dependence on inventories and limited cash availability. The transient improvements during 2020 could be attributable to specific operational or financial management adjustments, yet the subsequent declines imply those were not sustained into early 2021.

Current Assets

Current assets fluctuated moderately over the analyzed period, generally ranging between approximately $5,000 million and $6,000 million. Notably, there was an increase toward the middle of 2020, peaking at over $6,000 million in the third quarter, followed by a decline toward early 2021 back to levels slightly above $5,100 million. This indicates some variability but no consistent upward or downward trend over the time frame.

Current Liabilities

Current liabilities consistently remained above current assets throughout the observed quarters, generally oscillating between roughly $5,800 million to nearly $7,200 million. There was a peak around early 2019 at over $7,100 million, followed by a decreasing trend toward mid-2020 before rising again in early 2021. The liabilities data reflects a persistently high short-term obligation level relative to assets.

Current Ratio

The current ratio values confirm a liquidity position below 1.0 for most periods, suggesting that current liabilities exceeded current assets consistently. The ratio ranged from 0.73 to 1.00, with a low of 0.73 recorded multiple times and briefly reaching parity at 1.00 in the third quarter of 2020. The ratio tended to dip in early 2018 and early 2019, indicating tighter liquidity, and improved in mid to late 2020 before declining again in early 2021.

Overall Financial Position Insights

The company demonstrated a persistent liquidity challenge as current liabilities regularly surpassed current assets, as reflected by current ratios below 1. This structural imbalance points to potential risks in meeting short-term obligations without additional financing or asset liquidation. The mid-2020 improvement in the current ratio suggests some temporary alleviation in liquidity pressures, possibly due to increased current assets or decreased liabilities during that time. However, the return to lower ratios by early 2021 indicates that the underlying liquidity constraints remain an area for continued monitoring and management focus.

The analysis of the quarterly financial data reveals several key trends and insights regarding the company's liquidity position over the reported periods.

Total Quick Assets

The total quick assets generally fluctuated within a range of approximately 2500 to 3600 million US dollars. Early in the period, from March 2017 to December 2017, the values showed moderate variability, peaking around 3272 million and dipping to about 2703 million. The first quarter of 2020 saw a notable increase, reaching a peak of 3643 million, suggesting a temporary strengthening of liquid assets. However, towards March 2021, total quick assets decreased to approximately 2519 million, indicating a reduced liquidity level compared to the previous highs.

Current Liabilities

Current liabilities demonstrated an overall upward trend with some fluctuations within the range of about 5400 to nearly 7200 million US dollars. Starting around 5864 million in March 2017, liabilities showed increases and decreases seasonally but generally grew over time, peaking at 7197 million in the first quarter of 2019. Subsequent periods exhibited variability but maintained high levels above 6000 million, ending at 6694 million by March 2021. This trend points to elevated short-term obligations on the company’s balance sheet.

Quick Ratio

The quick ratio which measures immediate liquidity, consistently remained below 1.0 throughout the observed period, indicating that quick assets are insufficient to cover current liabilities at any point. The ratio started at about 0.52 in March 2017, experienced a decline especially through 2018 and 2019, reaching lows near 0.39 by the final quarter of 2019. A significant temporary improvement occurred during 2020, with the quick ratio rising to as high as 0.60 by the third quarter. This suggests a transient strengthening of the liquidity position, possibly related to strategic cash management or market conditions during that year. However, by the first quarter of 2021, the quick ratio fell again to around 0.38, reflecting renewed liquidity pressures.

In summary, the data indicates that the company has faced challenges in maintaining a robust liquidity position relative to its short-term liabilities throughout the examined timeframe. Despite occasional improvements, especially during 2020, the quick ratio remains below an ideal level, highlighting a consistent reliance on less liquid assets or short-term financing. The rising current liabilities reinforce the notion of increasing short-term obligations that outpace quick asset growth, suggesting a need for continued focus on liquidity management strategies moving forward.

Cash Assets Trend

The total cash assets exhibited significant fluctuations throughout the observed periods. Initially, there was a moderate rise from 835 million US dollars at the end of the first quarter of 2017 to a peak of 1,051 million in the second quarter. This was followed by a decline throughout the remainder of 2017 and into 2018, reaching a low point of 484 million in the middle of 2018. Late 2018 and early 2019 saw some recovery, but cash assets remained below the earlier peak values. Notably, a pronounced increase occurred in 2020, particularly in the second and third quarters, where cash assets surged to 1,448 and 1,518 million respectively. However, this spike was short-lived as cash holdings sharply dropped again in the final quarter of 2020 and remained low into the first quarter of 2021.

Current Liabilities Trend

Current liabilities steadily increased over the period under review. Starting at 5,864 million US dollars in the first quarter of 2017, liabilities generally trended upwards, peaking at 7,197 million at the start of 2019. Following this peak, there was some fluctuation with minor declines and rises, but overall, liabilities remained elevated relative to the earlier years. By the first quarter of 2021, current liabilities were recorded at 6,694 million, higher than the initial 2017 values but below the 2019 peak. This indicates a tendency toward increased short-term obligations over time.

Cash Ratio Analysis

The cash ratio revealed considerable variability across reporting periods. It began at 0.14 in early 2017, briefly increasing to 0.18 in the second quarter before generally declining through 2017 and 2018, reaching lows around 0.06 during late 2019. A noticeable improvement occurred in 2020, with the cash ratio rising sharply to 0.25 by the third quarter, aligning with the surge in cash assets during that timeframe. Despite this, the ratio plummeted again at the end of 2020 and remained very low (around 0.05) into early 2021. The fluctuations in the cash ratio reflect significant volatility in liquidity relative to current liabilities.

Overall Insights

The analysis highlights a pattern of fluctuating liquidity, driven largely by swings in cash assets against a backdrop of rising current liabilities. The substantial cash accumulation mid-2020 may suggest a strategic response to external factors requiring enhanced liquidity or risk mitigation. However, the subsequent rapid decline in cash assets and cash ratio by early 2021 points to possible utilization of these reserves or changing operational needs. The steady increase in current liabilities suggests growing short-term financial commitments, which, combined with fluctuating cash availability, could affect the company’s short-term financial flexibility.