Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Kinder Morgan Inc., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31).
- Current Ratio
- The current ratio generally remained below 1.0 throughout the observed periods, indicating limited short-term liquidity relative to current liabilities. There is notable fluctuation, with a low point around mid-2016 at approximately 0.38, followed by gradual improvement reaching slightly above 1.0 in the third quarter of 2018. After this peak, the ratio declines again before a modest recovery towards early 2020. Such variability suggests episodic changes in current asset management or current liabilities.
- Quick Ratio
- The quick ratio follows a similar pattern to the current ratio but stays consistently lower, reflecting a more conservative measure of liquidity excluding inventory. Early periods show values around 0.2 to 0.4, a significant increase occurs in the third quarter of 2018 reaching near 0.9, followed by a decline to approximately 0.23 by late 2019. A rebound is observed in early 2020. This pattern indicates temporary strengthening of liquid assets excluding inventory, potentially due to increased receivables or cash-like assets, but with subsequent reduction.
- Cash Ratio
- The cash ratio exhibits the lowest values among liquidity measures, reflecting minimal cash and cash equivalents relative to current liabilities. The ratio remains below 0.2 for most periods, with a pronounced spike in the third quarter of 2018 to roughly 0.65, followed by a sharp decrease. The recovery in early 2020 to about 0.22 suggests some improvement in immediate liquidity but still indicates cautious cash management. The spikes and troughs imply episodic inflows or outflows of cash or cash equivalents impacting liquidity.
Current Ratio
Kinder Morgan Inc., current ratio calculation (quarterly data)
| Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Current assets | 3,096) | 3,238) | 2,365) | 2,300) | 2,262) | 5,722) | 5,766) | 2,634) | 2,628) | 2,715) | 2,613) | 2,726) | 2,675) | 3,229) | 3,363) | 2,470) | 2,481) | ||||||
| Current liabilities | 5,608) | 5,100) | 6,826) | 5,659) | 5,009) | 7,557) | 5,489) | 5,379) | 5,429) | 6,181) | 6,174) | 6,363) | 6,689) | 5,924) | 6,044) | 6,566) | 4,396) | ||||||
| Liquidity Ratio | |||||||||||||||||||||||
| Current ratio1 | 0.55 | 0.63 | 0.35 | 0.41 | 0.45 | 0.76 | 1.05 | 0.49 | 0.48 | 0.44 | 0.42 | 0.43 | 0.40 | 0.55 | 0.56 | 0.38 | 0.56 | ||||||
| Benchmarks | |||||||||||||||||||||||
| Current Ratio, Competitors2 | |||||||||||||||||||||||
| Chevron Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| ConocoPhillips | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Exxon Mobil Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31).
1 Q1 2020 Calculation
Current ratio = Current assets ÷ Current liabilities
= 3,096 ÷ 5,608 = 0.55
2 Click competitor name to see calculations.
The financial data reveals fluctuations in key liquidity metrics over the analyzed periods. Current assets exhibit variability, with values ranging from a low of approximately 2,262 million to a high near 5,766 million US dollars. Notably, there is a peak around the third quarter of 2018, followed by a notable decline in subsequent quarters before a partial recovery in early 2020.
Current liabilities also demonstrate significant variation, oscillating between roughly 4,396 million and 7,557 million US dollars. The highest liabilities are observed in the last quarter of 2018, with values generally trending downward before rising again towards the end of the period observed.
The current ratio, which assesses liquidity by comparing current assets to current liabilities, stays below 1 throughout the period, indicating that current liabilities consistently exceed current assets. The ratio's lowest values occur around late 2019, dipping to approximately 0.35, suggesting tighter liquidity conditions during that time. Conversely, the ratio peaks just above 1 in the third quarter of 2018, reflecting a temporary improvement in liquidity.
Overall, the company operates with a liquidity position that occasionally strengthens but remains generally constrained, with current liabilities persistently surpassing current assets. The trends suggest periods of enhanced liquidity around mid to late 2018, contrasted by tighter conditions in 2019. The partial recovery seen in early 2020 may indicate improved asset management or reductions in short-term obligations.
- Current Assets
- Demonstrate a peak in Q3 2018, followed by a decline and partial recovery by Q1 2020.
- Current Liabilities
- Show variability with a peak in Q4 2018 and a trend towards reduction before rising again in late 2019.
- Current Ratio
- Remains below 1, indicating liabilities exceed assets; peaks above 1 in Q3 2018; lowest near 0.35 in late 2019.
Quick Ratio
Kinder Morgan Inc., quick ratio calculation (quarterly data)
| Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Cash and cash equivalents | 360) | 185) | 241) | 213) | 221) | 3,280) | 3,459) | 271) | 294) | 264) | 539) | 452) | 396) | 684) | 357) | 180) | 175) | ||||||
| Restricted deposits | 582) | 24) | 27) | 36) | 49) | 51) | 101) | 76) | 69) | 62) | 81) | 66) | 90) | 103) | 888) | —) | —) | ||||||
| Marketable securities at fair value | —) | 925) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | ||||||
| Accounts receivable, net | 1,186) | 1,370) | 1,273) | 1,227) | 1,310) | 1,498) | 1,384) | 1,357) | 1,349) | 1,448) | 1,194) | 1,184) | 1,263) | 1,370) | 1,282) | 1,278) | 1,203) | ||||||
| Total quick assets | 2,128) | 2,504) | 1,541) | 1,476) | 1,580) | 4,829) | 4,944) | 1,704) | 1,712) | 1,774) | 1,814) | 1,702) | 1,749) | 2,157) | 2,527) | 1,458) | 1,378) | ||||||
| Current liabilities | 5,608) | 5,100) | 6,826) | 5,659) | 5,009) | 7,557) | 5,489) | 5,379) | 5,429) | 6,181) | 6,174) | 6,363) | 6,689) | 5,924) | 6,044) | 6,566) | 4,396) | ||||||
| Liquidity Ratio | |||||||||||||||||||||||
| Quick ratio1 | 0.38 | 0.49 | 0.23 | 0.26 | 0.32 | 0.64 | 0.90 | 0.32 | 0.32 | 0.29 | 0.29 | 0.27 | 0.26 | 0.36 | 0.42 | 0.22 | 0.31 | ||||||
| Benchmarks | |||||||||||||||||||||||
| Quick Ratio, Competitors2 | |||||||||||||||||||||||
| Chevron Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| ConocoPhillips | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Exxon Mobil Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31).
1 Q1 2020 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 2,128 ÷ 5,608 = 0.38
2 Click competitor name to see calculations.
- Trends in Total Quick Assets
- The total quick assets displayed variability across the periods analyzed. Initially, there was a moderate increase from 1,378 million US dollars at the end of the first quarter in 2016 to a peak of 2,527 million by the third quarter of the same year. After this peak, the quick assets generally fluctuated within a range, with a notable spike to 4,944 million in the third quarter of 2018, which represents the highest point in the dataset. Following this spike, the total quick assets declined sharply in the subsequent quarter but remained above earlier levels, settling at 2,128 million US dollars by the first quarter of 2020.
- Trends in Current Liabilities
- Current liabilities showed a pattern of fluctuations without a clear directional trend over the observed periods. Starting at 4,396 million US dollars in the first quarter of 2016, liabilities peaked at 7,557 million in the fourth quarter of 2018, indicating a significant increase around this time. After reaching this high point, current liabilities generally decreased but remained elevated relative to the initial periods, ending at 5,608 million in the first quarter of 2020. The volatility in current liabilities aligns with observed fluctuations in quick assets.
- Quick Ratio Analysis
- The quick ratio, a key liquidity metric, exhibited notable variability. The ratio started below 0.5, at 0.31, then declined further to a low of 0.22 in the second quarter of 2016, before recovering to 0.42 by the third quarter of 2016. It remained relatively stable in the range of 0.26 to 0.32 through most of 2017 and early 2018. A significant jump occurred in the third quarter of 2018, reaching a peak of 0.90, coincident with the surge in quick assets. However, following this peak, the ratio declined sharply, falling to 0.23 by the third quarter of 2019. It partially recovered to 0.49 in the fourth quarter of 2019 before decreasing again to 0.38 in the first quarter of 2020. These fluctuations suggest periods of varying liquidity strength, with the company experiencing improved short-term asset coverage relative to liabilities particularly in late 2018 and early 2019.
- Insights and Implications
- The data indicate episodic improvements in liquidity, especially notable around the third quarter of 2018, when quick assets surged and the quick ratio approached near 1, suggesting strong short-term financial position at that time. However, the subsequent declines in both quick assets and quick ratio suggest transient liquidity enhancement rather than sustained improvement. The relatively volatile current liabilities over the examined period may contribute to the fluctuations in liquidity measures. Overall, the company's liquidity appears to oscillate, reflecting possible operational or financing activities impacting working capital management. Management may need to focus on stabilizing liquidity to ensure consistent short-term financial health.
Cash Ratio
Kinder Morgan Inc., cash ratio calculation (quarterly data)
| Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Cash and cash equivalents | 360) | 185) | 241) | 213) | 221) | 3,280) | 3,459) | 271) | 294) | 264) | 539) | 452) | 396) | 684) | 357) | 180) | 175) | ||||||
| Restricted deposits | 582) | 24) | 27) | 36) | 49) | 51) | 101) | 76) | 69) | 62) | 81) | 66) | 90) | 103) | 888) | —) | —) | ||||||
| Marketable securities at fair value | —) | 925) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | ||||||
| Total cash assets | 942) | 1,134) | 268) | 249) | 270) | 3,331) | 3,560) | 347) | 363) | 326) | 620) | 518) | 486) | 787) | 1,245) | 180) | 175) | ||||||
| Current liabilities | 5,608) | 5,100) | 6,826) | 5,659) | 5,009) | 7,557) | 5,489) | 5,379) | 5,429) | 6,181) | 6,174) | 6,363) | 6,689) | 5,924) | 6,044) | 6,566) | 4,396) | ||||||
| Liquidity Ratio | |||||||||||||||||||||||
| Cash ratio1 | 0.17 | 0.22 | 0.04 | 0.04 | 0.05 | 0.44 | 0.65 | 0.06 | 0.07 | 0.05 | 0.10 | 0.08 | 0.07 | 0.13 | 0.21 | 0.03 | 0.04 | ||||||
| Benchmarks | |||||||||||||||||||||||
| Cash Ratio, Competitors2 | |||||||||||||||||||||||
| Chevron Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| ConocoPhillips | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Exxon Mobil Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31).
1 Q1 2020 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 942 ÷ 5,608 = 0.17
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends regarding the liquidity and short-term financial position of the company over the observed periods.
- Total Cash Assets
- Total cash assets exhibit significant volatility throughout the quarters. An initial low range between US$175 million and US$180 million during early 2016 is followed by a sharp increase to US$1,245 million in the third quarter of 2016, then a decline to levels around US$326 million by the end of 2017. The cash balances sharply spike again in the fourth quarter of 2018, reaching US$3,560 million, followed by a decline back to approximately US$249 million through mid-2019 before another increase to over US$1,000 million in the first quarter of 2020. This pattern suggests cash management that might be linked to specific quarterly cash inflows or financing activities occurring periodically.
- Current Liabilities
- Current liabilities demonstrate considerable fluctuations, with a general range between approximately US$4,300 million and US$7,500 million. Notably, liabilities peaked at US$7,557 million in the fourth quarter of 2018, coinciding with the highest spike in cash assets. After this peak, liabilities decreased to around US$5,100 million by the first quarter of 2020, showing some reduction but maintaining a generally high level relative to previous years. This may reflect variations in short-term obligations or working capital financing requirements.
- Cash Ratio
- The cash ratio exhibits considerable variability and aligns closely with the movements in total cash assets relative to current liabilities. Early 2016 presents very low ratios around 0.03 to 0.04, followed by a substantial increase to 0.21 in the third quarter of 2016. Ratios decline back below 0.1 for much of 2017 and early 2018 but spike sharply to 0.65 in the third quarter and remain relatively high (around 0.44) into the fourth quarter of 2018. Subsequently, the ratio falls again to levels near 0.04 in mid-2019 before increasing to 0.22 in the first quarter of 2020. These fluctuations indicate episodic improvements in liquidity coverage of current liabilities by cash, likely driven by the timing of inflows and outflows.
Overall, the financial data reflects a pattern of episodic large cash holdings and liquidity coverage, interspersed with periods of tighter cash constraints relative to current liabilities. Peaks in cash and liquidity ratios tend to coincide with spikes in current liabilities, suggesting potential timing differences in cash inflows and short-term obligations or possibly strategic financial maneuvers around specific quarters. The considerable variability underscores the importance of monitoring cash flow management closely in relation to short-term debt obligations.