Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Mosaic Co., liquidity ratios
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Current ratio | 1.11 | 1.12 | 1.43 | 1.71 | 2.27 | |
| Quick ratio | 0.48 | 0.46 | 0.51 | 0.68 | 1.38 | |
| Cash ratio | 0.16 | 0.18 | 0.20 | 0.34 | 1.06 |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Current Ratio
- The current ratio demonstrates a consistent downward trend from 2.27 in 2017 to 1.11 in 2021. This decline indicates a decreasing level of current assets relative to current liabilities, suggesting a weakening short-term liquidity position over the analyzed period.
- Quick Ratio
- The quick ratio also declined significantly from 1.38 in 2017 to 0.48 in 2021. This sharper decrease compared to the current ratio implies a stronger reduction in highly liquid assets, excluding inventories. The sustained drop may point to a reduced ability to meet immediate obligations without relying on inventory sales.
- Cash Ratio
- The cash ratio follows a similar downward trajectory, falling from 1.06 in 2017 to 0.16 in 2021. This ratio, which reflects the most liquid assets against current liabilities, experienced the most pronounced decline, indicating a significant reduction in cash and cash equivalents relative to short-term liabilities.
- Overall Liquidity Analysis
- All three liquidity ratios reveal a pronounced decline across the five-year span. The magnitudes of decrease suggest a gradual deterioration in the company's liquidity position, with particularly sharp drops in the cash and quick ratios. This pattern may indicate increased reliance on less liquid assets or tighter working capital management, potentially raising concerns about short-term financial flexibility.
Current Ratio
Mosaic Co., current ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 5,325,300) | 3,521,200) | 3,718,200) | 4,237,000) | 4,616,500) | |
| Current liabilities | 4,787,400) | 3,146,500) | 2,591,700) | 2,483,700) | 2,031,100) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 1.11 | 1.12 | 1.43 | 1.71 | 2.27 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Linde plc | 0.74 | 0.80 | — | — | — | |
| Sherwin-Williams Co. | 0.88 | 1.00 | — | — | — | |
| Current Ratio, Sector | ||||||
| Chemicals | 0.79 | 0.85 | — | — | — | |
| Current Ratio, Industry | ||||||
| Materials | 1.19 | 1.14 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Current ratio = Current assets ÷ Current liabilities
= 5,325,300 ÷ 4,787,400 = 1.11
2 Click competitor name to see calculations.
The analysis of the annual financial data reveals several notable trends in liquidity and balance sheet management over the period from 2017 to 2021.
- Current Assets
- Current assets demonstrate a fluctuating pattern, starting at 4,616,500 thousand US dollars in 2017 and declining steadily through 2018 (4,237,000) and 2019 (3,718,200), continuing to decrease in 2020 to 3,521,200. However, a significant increase is observed in 2021, with current assets rising sharply to 5,325,300. This suggests a possible strategic accumulation or improved operational cash flows in the latest year.
- Current Liabilities
- Current liabilities exhibit a consistent upward trend throughout the period. Beginning at 2,031,100 thousand US dollars in 2017, liabilities increased each year, reaching 2,483,700 in 2018, 2,591,700 in 2019, 3,146,500 in 2020, and peaking at 4,787,400 in 2021. This steady rise signifies increasing short-term obligations or operational financing needs.
- Current Ratio
- The current ratio displays a declining trajectory from 2.27 in 2017 to 1.11 in 2021, indicating a reduction in liquidity. The ratio falls below the typically considered safe threshold of 1.5 after 2018, reaching as low as 1.11, which may point to potential challenges in covering short-term liabilities with current assets despite the large increase in assets in the final year.
In summary, while the company’s current assets showed a recovery in 2021 after a period of decline, current liabilities rose steadily across all years, resulting in a continuous decrease in the current ratio. This trend suggests increasing pressure on short-term liquidity and highlights the importance of monitoring working capital management to ensure financial stability going forward.
Quick Ratio
Mosaic Co., quick ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 769,500) | 574,000) | 519,100) | 847,700) | 2,153,500) | |
| Receivables, net | 1,531,900) | 881,100) | 803,900) | 838,500) | 642,600) | |
| Total quick assets | 2,301,400) | 1,455,100) | 1,323,000) | 1,686,200) | 2,796,100) | |
| Current liabilities | 4,787,400) | 3,146,500) | 2,591,700) | 2,483,700) | 2,031,100) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 0.48 | 0.46 | 0.51 | 0.68 | 1.38 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Linde plc | 0.55 | 0.59 | — | — | — | |
| Sherwin-Williams Co. | 0.44 | 0.50 | — | — | — | |
| Quick Ratio, Sector | ||||||
| Chemicals | 0.52 | 0.57 | — | — | — | |
| Quick Ratio, Industry | ||||||
| Materials | 0.78 | 0.71 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 2,301,400 ÷ 4,787,400 = 0.48
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets exhibited a declining trend from 2017 to 2019, decreasing from approximately 2,796,100 thousand US dollars to 1,323,000 thousand US dollars. This was followed by a slight recovery in 2020 to 1,455,100 thousand US dollars and a more significant increase in 2021 reaching 2,301,400 thousand US dollars. Despite the initial decline, the level of quick assets at the end of 2021 remains below the peak seen in 2017, indicating a partial recovery over the analyzed period.
- Current liabilities
- Current liabilities showed a consistent upward trajectory across the entire time frame. Starting at 2,031,100 thousand US dollars in 2017, liabilities increased each year, reaching a peak of 4,787,400 thousand US dollars in 2021. The rise was particularly pronounced between 2020 and 2021, with an increase of over 1,640,000 thousand US dollars, indicating a growing short-term financial obligation.
- Quick ratio
- The quick ratio, which measures the ability to cover current liabilities with quick assets, declined sharply from 1.38 in 2017 to 0.46 in 2020. This decline reflects a deterioration in short-term liquidity over these years. In 2021, there was a marginal improvement to 0.48, though the ratio remains well below 1.0, suggesting that quick assets are insufficient to cover current liabilities. The trend indicates increasing liquidity risk despite the partial recovery in quick assets in recent years.
Cash Ratio
Mosaic Co., cash ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 769,500) | 574,000) | 519,100) | 847,700) | 2,153,500) | |
| Total cash assets | 769,500) | 574,000) | 519,100) | 847,700) | 2,153,500) | |
| Current liabilities | 4,787,400) | 3,146,500) | 2,591,700) | 2,483,700) | 2,031,100) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.16 | 0.18 | 0.20 | 0.34 | 1.06 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Linde plc | 0.21 | 0.27 | — | — | — | |
| Sherwin-Williams Co. | 0.03 | 0.05 | — | — | — | |
| Cash Ratio, Sector | ||||||
| Chemicals | 0.15 | 0.22 | — | — | — | |
| Cash Ratio, Industry | ||||||
| Materials | 0.44 | 0.35 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 769,500 ÷ 4,787,400 = 0.16
2 Click competitor name to see calculations.
The analysis of the financial data reveals significant movements in cash assets, current liabilities, and the cash ratio over the five-year period.
- Total Cash Assets
- There is a marked decline from 2,153,500 thousand US dollars at the end of 2017 to 519,100 thousand US dollars at the end of 2019, representing a substantial reduction in cash holdings. In 2020, a slight recovery is observed with cash assets increasing to 574,000 thousand US dollars, followed by a further increase to 769,500 thousand US dollars in 2021. Despite this recent upward movement, the cash assets in 2021 remain significantly below the level noted in 2017.
- Current Liabilities
- The current liabilities exhibit a consistent upward trend across the period. Starting at 2,031,100 thousand US dollars in 2017, the liabilities rose steadily each year, reaching 4,787,400 thousand US dollars by the end of 2021. This more than doubling of current liabilities over five years suggests increasing short-term obligations.
- Cash Ratio
- The cash ratio, which measures liquidity by comparing cash assets to current liabilities, has deteriorated markedly. Beginning at 1.06 in 2017, indicating that cash assets slightly exceeded current liabilities, it has decreased sharply to 0.16 by the end of 2021. This downward trend reflects a decreasing ability to cover short-term liabilities with cash, suggesting potential liquidity pressure.
In summary, the data indicate that while cash assets have experienced a decline followed by a partial recovery, current liabilities have increased substantially over the same period. Consequently, the cash ratio has fallen significantly, signaling diminishing liquidity and a potentially higher risk profile related to meeting short-term financial obligations.