LyondellBasell Industries N.V. (NYSE:LYB)

Current Ratio Trends

The current ratio exhibited a generally stable pattern from the first quarter of 2015 through the end of 2017, fluctuating mostly between 2.1 and 2.6. This indicates a consistently strong short-term liquidity position during that time frame. However, beginning in early 2018, a downward trend is evident, with the ratio declining steadily to 1.47 by mid-2019. This reduction suggests a weakening in the company's ability to cover short-term liabilities with current assets as the ratios approach a lower boundary.

Quick Ratio Analysis

The quick ratio remained relatively stable around 1.1 to 1.3 from 2015 through 2017, signifying sufficient liquid assets excluding inventories to meet short-term obligations. Similar to the current ratio, a notable decline begins in early 2018, dropping below 1.0 in the first half of 2019. This decrease points to a diminishing cushion of highly liquid assets, which may potentially affect the company's financial flexibility in the short term.

Cash Ratio Observations

The cash ratio started at moderate levels between 0.46 and 0.63 from 2015 through 2017, suggesting the company maintained a fair amount of cash and cash equivalents relative to current liabilities. After a peak around early 2018, the ratio sharply decreased, reaching lows of approximately 0.11 by mid-2019. This significant reduction highlights a marked decrease in immediate liquidity, indicating potential increased reliance on other current assets or financing to meet short-term obligations.

Overall Liquidity Insights

Across all three liquidity ratios—current, quick, and cash—there is a clear pattern of stable liquidity up to the end of 2017, followed by a pronounced decline starting in early 2018 and continuing into mid-2019. This shift suggests a change in the company’s working capital management or operational conditions that led to lower liquidity buffers. The decreasing ratios imply growing caution about the company's short-term financial health and signal the need for closer financial monitoring.

The analysis of the quarterly financial data reveals several important trends in the liquidity position of the company over the observed periods.

Current Assets

Current assets showed some fluctuations across the quarters. Starting from a value of 11,647 million US dollars in March 2015, they experienced a slight increase until June 2015, followed by a gradual decline until December 2015. From early 2016, current assets exhibited a general upward trend until the first quarter of 2018, peaking at 12,349 million US dollars. However, after this peak, a downward movement was observed through 2018 and into mid-2019, reaching 11,088 million US dollars in June 2019.

Current Liabilities

Current liabilities remained relatively stable in 2015 and early 2016, fluctuating around 4,300 to 5,200 million US dollars. From mid-2017 onward, however, there was a noticeable upward trend, with liabilities increasing substantially, peaking at 7,538 million US dollars in June 2019. This rising liability trend, especially after 2017, could indicate growing short-term obligations.

Current Ratio

The current ratio, which measures liquidity by comparing current assets to current liabilities, shows a clear trend of decline over the periods. Initially, the ratio was healthy, fluctuating between approximately 2.1 and 2.6 from 2015 through early 2018, indicating strong liquidity and an ability to cover short-term liabilities comfortably. However, starting in mid-2018, the current ratio decreased notably, falling below 2.0 and reaching as low as 1.47 by mid-2019. This decline suggests a weakening liquidity position, where current liabilities grew faster than current assets, potentially increasing liquidity risk.

In summary, while the company maintained a solid liquidity position throughout most of the observed period, especially between 2015 and early 2018, the later quarters show signs of declining liquidity. The rising current liabilities combined with a modest decrease in current assets contributed to a reduced current ratio, suggesting increasing short-term financial pressures. Monitoring this trend will be important to assess the company's ability to meet its short-term obligations in the future.

The analysis of the quarterly financial data reveals notable trends in the company's liquidity position over the assessed periods.

Total Quick Assets

The total quick assets exhibited fluctuations across the quarters. Initially, there was an increase reaching a peak of 6,690 million US$ in mid-2015, followed by a decline towards the end of 2015. Throughout 2016 and 2017, total quick assets showed a general upward trend, peaking at 7,208 million US$ in mid-2018. However, from the third quarter of 2018 onwards, there was a discernible decrease, with assets falling to approximately 4,461 million US$ by the first quarter of 2019 before a slight recovery in the second quarter of 2019 to 5,118 million US$.

Current Liabilities

Current liabilities remained relatively stable with minor fluctuations during the initial periods, maintaining levels around 4,300 to 5,200 million US$. A mild increase was observed in 2018, culminating in a more significant rise towards the end of 2018 and into 2019. By the second quarter of 2019, current liabilities had increased notably to 7,538 million US$, indicating higher short-term obligations during this period.

Quick Ratio

The quick ratio, indicative of the company's ability to meet short-term liabilities with its most liquid assets, generally stayed above 1.0 till mid-2018, reflecting a comfortable liquidity position. The ratio peaked at 1.47 in early 2018, denoting strong liquidity. However, from the third quarter of 2018 onwards, a marked decline is evident, with the quick ratio dropping below 1.0 and reaching a low of 0.64 in early 2019. By mid-2019, a minor improvement brought the ratio to 0.68, yet it remained below the threshold indicating sufficient liquid coverage of current liabilities.

Overall, the data suggests that while the company maintained a solid liquidity position through mid-2018, this position weakened significantly during late 2018 and early 2019 due to a combination of declining quick assets and increasing current liabilities. This change signals a potential increase in short-term financial pressure requiring attention to improve liquidity management going forward.

The analysis of the recent quarterly financials reveals several notable trends in liquidity and current liabilities over the examined periods.

Total Cash Assets

Total cash assets exhibit a fluctuating trajectory. Initially, from early 2015 through to the end of 2017, there is evidence of variability but with values generally ranging between approximately 1,600 million and 3,300 million US dollars. A peak is seen in mid-2018 reaching near 3,300 million before a pronounced decline occurs starting in late 2018 and continuing through mid-2019, where cash assets diminish to levels below 800 million US dollars at the lowest point, indicating a significant reduction in cash holdings during this latest period.

Current Liabilities

Current liabilities portray a generally increasing trend over the timeframe. From around 5,000 million US dollars at the beginning of 2015, liabilities remain relatively steady during 2015 and 2016, fluctuating modestly between roughly 4,300 million and 5,400 million. However, starting in early 2018, these liabilities increase markedly, peaking above 7,500 million US dollars by mid-2019. This continuous rise suggests growing short-term financial obligations.

Cash Ratio

The cash ratio, which measures immediate liquidity by comparing cash assets to current liabilities, mirrors these underlying shifts. In 2015, the ratio mostly stays around 0.60, indicative of moderate liquidity. There is a decline throughout 2016 and 2017, touching lows near 0.38, followed by a moderate rebound to about 0.63 in early 2018. Subsequently, a sharp decrease occurs, and by 2019, the ratio plunges to a critically low level between 0.11 and 0.18. This downward trend suggests a diminished capacity to cover current liabilities with cash alone, signaling potential liquidity stress.

In summary, the data underscore a weakening liquidity position in the most recent quarters, driven by both a considerable reduction in cash assets and a simultaneous increase in current liabilities. These trends warrant attention as they may impact the company’s short-term financial stability and flexibility.