LyondellBasell Industries N.V. (NYSE:LYB)

The financial ratios over the five-year period exhibit varying trends, reflecting changes in liquidity management and overall financial stability.

Current Ratio

The current ratio remained relatively stable from 2014 through 2017, fluctuating between 2.11 and 2.46. This indicates a consistently strong ability to meet short-term liabilities with current assets during these years. However, in 2018, there was a noticeable decline to 1.92, suggesting a reduction in short-term liquidity and a potential tightening of available current assets relative to current liabilities.

Quick Ratio

The quick ratio showed minor fluctuations from 2014 (1.12) to 2017 (1.33), with an overall slight improvement until 2017, which indicates a stable to improving position in terms of liquid assets excluding inventory. Nonetheless, in 2018 the quick ratio decreased significantly to 0.87, signaling a considerable decrease in liquid assets relative to immediate liabilities, which may imply increased reliance on less liquid current assets or elevated short-term obligations.

Cash Ratio

The cash ratio was relatively stable and low between 2014 and 2016, hovering around 0.45 to 0.48. An improvement occurred in 2017, rising to 0.59, indicating enhanced cash reserves or cash equivalents relative to current liabilities. However, like other liquidity ratios, the cash ratio sharply declined in 2018 to 0.23, denoting a substantial reduction in cash and cash equivalents available to cover short-term liabilities, which raises concerns about immediate liquidity.

Overall, the data reflect a period of steady liquidity from 2014 through 2017 followed by a marked deterioration in all measures of liquidity in 2018. This downward trend in 2018 across the current, quick, and cash ratios suggests heightened liquidity risk and potentially more constrained financial flexibility in the short term during that year.

Current assets

The current assets of the company demonstrate a fluctuating trend over the five-year period. Initially, current assets decreased from 11,645 million USD in 2014 to 9,789 million USD in 2015, continuing to slightly decline to 9,599 million USD in 2016. There was a notable recovery in 2017, when current assets rose to 11,738 million USD, before slightly decreasing again to 10,566 million USD in 2018. Overall, the current assets exhibit variability with a partial rebound in the latter part of the period.

Current liabilities

Current liabilities show a generally increasing pattern over the five years. The value declined from 5,437 million USD in 2014 to 4,349 million USD in 2015 but then gradually increased starting from 4,540 million USD in 2016, 4,777 million USD in 2017, reaching 5,513 million USD in 2018. The upward trend after 2015 suggests growing short-term obligations.

Current ratio

The current ratio fluctuated within the range of approximately 1.9 to 2.5 during the period. It increased from 2.14 in 2014 to 2.25 in 2015, and then declined to 2.11 in 2016. A peak was observed in 2017 at 2.46, indicating improved short-term liquidity, potentially due to the increased current assets and relatively moderate current liabilities that year. However, this ratio dropped to 1.92 in 2018, the lowest point in the period, reflecting a decrease in liquidity relative to short-term liabilities.

Summary insight

The data suggest that although the company experienced fluctuations in current assets and liabilities, its short-term liquidity remained above 1.9 throughout the period, which typically indicates the ability to cover short-term obligations. The peak in current ratio in 2017 reveals a temporary strengthening in liquidity, likely supported by the rise in current assets during that year. However, the decline of the current ratio to below 2 in 2018, combined with the increasing current liabilities, may warrant closer monitoring of the company's ability to manage its short-term financial commitments.

The financial data reveals fluctuations in liquidity and short-term financial stability over the five-year period from 2014 to 2018.

Total quick assets

There was a noticeable decline from 2014 to 2015, dropping from 6,074 million US$ to 4,512 million US$. In 2016, quick assets slightly increased to 4,867 million US$, followed by a significant rise in 2017 reaching 6,374 million US$. However, this upward movement was not sustained, as the value decreased again in 2018 to 4,796 million US$.

Current liabilities

The current liabilities showed a decreasing trend from 5,437 million US$ in 2014 to 4,349 million US$ in 2015. Subsequently, liabilities gradually climbed, reaching 4,540 million US$ in 2016 and 4,777 million US$ in 2017. This upward trend continued into 2018, with a more pronounced increase to 5,513 million US$.

Quick ratio

The quick ratio remained relatively stable above 1.0 from 2014 through 2017, starting at 1.12 in 2014 and fluctuating slightly with a low of 1.04 in 2015 and a peak of 1.33 in 2017. This indicates that during these years, liquid assets were consistently sufficient to cover current liabilities. However, in 2018, the quick ratio fell sharply to 0.87, indicating that liquid assets were no longer adequate to meet current liabilities, representing a potential liquidity concern.

In summary, the data indicates a generally stable liquidity position from 2014 to 2017 with some volatility in quick assets and current liabilities. The notable decline in the quick ratio in 2018 warrants attention as it suggests diminished short-term financial flexibility. The rise in current liabilities coupled with reduction in quick assets that year may have impacted the company’s ability to meet immediate obligations.

The analysis of the financial data reveals several key trends in the company's liquidity and short-term financial obligations over the five-year period ending in 2018.

Total Cash Assets

The total cash assets show fluctuations across the period. The cash reserves decreased from 2,626 million USD in 2014 to 1,995 million USD in 2015 and remained relatively stable at around 2,025 million USD in 2016. A notable increase is observed in 2017, with cash assets rising to 2,835 million USD, representing the highest point within the period. However, there is a significant decline in 2018, where cash assets drop sharply to 1,293 million USD.

Current Liabilities

Current liabilities decreased substantially from 5,437 million USD in 2014 to 4,349 million USD in 2015, reflecting a reduction in short-term obligations. Thereafter, there is a gradual increase over the next three years: 4,540 million USD in 2016, 4,777 million USD in 2017, and a further rise to 5,513 million USD in 2018, returning close to the initial level recorded in 2014.

Cash Ratio

The cash ratio, which measures the company's ability to cover current liabilities with cash and cash equivalents, closely mirrors the trend in cash assets relative to current liabilities. It shows a slight decline from 0.48 in 2014 to 0.45 in 2016, indicating decreasing liquidity coverage. In 2017, the ratio improved significantly to 0.59, suggesting enhanced liquidity, before dropping steeply to 0.23 in 2018. This sharp decline in 2018 implies that the company's cash assets were considerably less sufficient to cover its current liabilities compared to previous years.

In summary, the data indicates that while the company experienced a peak in cash assets and improved liquidity coverage in 2017, by 2018 both cash reserves and liquidity ratios deteriorated considerably. Meanwhile, current liabilities decreased initially but trended upward in the latter years, culminating in a situation in 2018 where liquidity is considerably weaker relative to current obligations. This pattern may suggest increased short-term financial pressure or strategic changes impacting cash management during the most recent year.