McKesson Corp. (NYSE:MCK)

Current Ratio

The current ratio fluctuated modestly over the observed periods, remaining generally close to 1.1. It showed a peak at 1.19 in the quarter ending December 31, 2011, followed by a decline and another rise to 1.16 in June 2014. From mid-2014 onwards, the ratio exhibited slight downward pressure with values mostly around 1.10 to 1.15, ending at 1.12 in September 2016. This indicates a relatively stable short-term liquidity position with sufficient current assets to cover current liabilities, though the trend suggests only moderate fluctuations rather than significant improvements or deteriorations.

Quick Ratio

The quick ratio displayed minor variations within a narrow band of about 0.58 to 0.68 throughout the timeline. Early on, it was slightly higher, near 0.65 to 0.68, but experienced some dips below 0.60, particularly in the March 2012 and June 2012 quarters. It recovered somewhat mid-period, reaching 0.65 during June and September 2014, before gently declining and stabilizing around 0.63 to 0.64 toward the end of the timeframe. This profile reflects a consistent level of liquid assets excluding inventory, with no significant strengthening or weakening of immediate liquidity capabilities.

Cash Ratio

The cash ratio was comparatively low throughout all quarters, illustrating limited coverage of current liabilities by cash and cash equivalents alone. The ratio fluctuated between 0.10 and 0.20, showing some volatility. Its highest values occurred early, around 0.20 in September and December 2011, then it dipped noticeably to around 0.10 in June 2012 and March 2016. Mid-to-late periods showed modest recovery with values between 0.13 and 0.16, finishing at 0.15 in September 2016. This indicates that while the company maintained some cash reserves, these were relatively modest in proportion to its short-term obligations, suggesting reliance on other current assets to fulfill liquidity needs.

The financial data reflects the liquidity position of the company over multiple quarters, focusing on current assets, current liabilities, and the current ratio. An analysis of these items provides insights into the company's short-term financial health and ability to meet its obligations.

Current Assets

Current assets show a general upward trend from June 30, 2011, through September 30, 2016, increasing from approximately $22,374 million to over $41,338 million. There are some fluctuations within this period, including a notable jump between December 31, 2013, and March 31, 2014, where current assets increased sharply from about $25,234 million to $32,573 million. This increase suggests improved asset management or accumulation of more liquid assets. After this increase, the values remain relatively high with continued gradual growth, indicating strengthening liquidity.

Current Liabilities

Current liabilities also exhibit an increasing trend overall, starting at about $19,142 million in June 2011 and rising to $37,051 million by September 2016. There is a significant increase around the March 31, 2014, period, where liabilities surged from approximately $21,904 million at the end of 2013 to $29,501 million, closely mirroring the jump seen in current assets. Following this, current liabilities steadily grow, indicating that the company is taking on more short-term obligations over time.

Current Ratio

The current ratio fluctuates around a stable range throughout the entire period, generally staying between 1.07 and 1.19. This suggests that despite the growth in both assets and liabilities, the company maintains a consistent ability to cover its short-term liabilities with its short-term assets. The ratio shows minor quarterly variations but consistently remains above 1.0, which is typically viewed as a minimum threshold for adequate short-term liquidity. The current ratio slightly declined from around 1.17 in mid-2011 to approximately 1.07 in mid-2016, indicating a minor reduction in liquidity buffer but still an acceptable level of current asset coverage relative to liabilities.

In summary, the data reflects a period of significant growth in both current assets and current liabilities, with a relatively stable liquidity position as indicated by the current ratio. The company's ability to meet short-term obligations appears preserved throughout the timeframe, despite increases in nominal values of assets and liabilities. The marked increases around early 2014 suggest possible operational changes or balance sheet restructuring that influenced the working capital components.

The analysis of the quarterly financial data reveals several notable trends in the liquidity position of the company over the observed period. The company's total quick assets and current liabilities demonstrate significant fluctuations that impact the overall quick ratio, which is a key indicator of short-term financial health.

Total Quick Assets

The total quick assets show a general upward trend from June 30, 2011, to September 30, 2016. Starting at 12,488 million USD, these assets increased with some variability, reaching a peak of 23,772 million USD by the end of the period. Noteworthy increases occur around early 2014, with a significant jump from December 31, 2013 (13,181 million USD) to March 31, 2014 (18,386 million USD), and this higher level is generally maintained thereafter, indicating improved liquidity resources.

Current Liabilities

Current liabilities also increase steadily throughout the same period, starting at 19,142 million USD in June 2011 and rising to 37,051 million USD by September 2016. This increase is marked by a substantial surge in early 2014, similar to the trend observed in quick assets; liabilities rose sharply from 21,904 million USD at the end of 2013 to 29,501 million USD by March 31, 2014. The consistent rise in liabilities suggests growing short-term obligations that the company faces.

Quick Ratio

The quick ratio remains relatively stable but below 1 throughout the full timeline, indicating that quick assets are consistently lower than current liabilities, which may imply potential liquidity pressure in meeting short-term liabilities without relying on inventory sales. The ratio fluctuates between 0.58 and 0.68 in the initial years, dips to a low of 0.58 in March 2012 and again several times subsequently, and increases slightly post-2013 to range mostly between 0.62 and 0.65. There is no significant upward trend in the quick ratio despite increases in absolute quick assets and liabilities, reflecting parallel growth in both balance sheet components.

In conclusion, the data exhibits growing liquidity assets alongside increasing current liabilities, keeping the quick ratio relatively stable but below a neutral threshold of 1. This indicates that while the company has expanded its liquid asset base, it faces increasing short-term liabilities, maintaining a moderately constrained liquidity position. Monitoring these trends is essential for understanding the company's short-term financial flexibility and the adequacy of quick assets to cover immediate obligations.

Cash Assets Trend

Total cash assets display notable fluctuations over the observed periods. Initially, the cash assets rise from approximately 3.1 billion USD to nearly 4.2 billion USD by the end of 2011. However, a decline follows in early 2012, with levels dropping below 2.5 billion USD mid-year. The subsequent quarters show a recovery phase, peaking around 5.6 billion USD in early 2015. Despite some decreases thereafter, cash assets remain relatively elevated compared to the earlier periods, fluctuating between 3.4 billion USD and 5.5 billion USD through 2016.

Current Liabilities Trend

Current liabilities exhibit a generally increasing trajectory throughout the periods. Starting at approximately 19.1 billion USD in mid-2011, liabilities steadily climb with minor fluctuations, reaching about 21.9 billion USD by the end of 2013. A significant jump is observed starting in early 2014, with liabilities surging beyond 29 billion USD and continuing to rise, peaking at around 37 billion USD by late 2016. This upward trend suggests growing short-term obligations or expanded operational scale during this timeframe.

Cash Ratio Analysis

The cash ratio maintains a relatively low and somewhat volatile profile across the periods. Values oscillate between 0.10 and 0.20, indicating limited cash on hand relative to current liabilities. Early periods show a slight increase reaching 0.20 towards the end of 2011, followed by a decline fluctuating mostly between 0.10 and 0.15 from 2012 through 2016. The lowest observed ratio occurs in mid-2012 and early 2016, coinciding with some of the lower cash asset figures. Overall, the ratio reflects a conservative liquidity position with cash assets representing a small fraction of current liabilities.

Overall Insights

The data reveals a company managing growing short-term liabilities while maintaining volatile but generally increasing cash assets. The rising current liabilities may indicate expansion or increased operational demands, while the relatively low cash ratio suggests that cash and cash equivalents constitute a modest buffer against these obligations. Periodic increases in cash assets likely reflect efforts to bolster liquidity, although liquidity remains tight in relation to short-term liabilities throughout most periods analyzed.