Mosaic Co. (NYSE:MOS)

Current Ratio

The current ratio exhibited a gradual decline from the first quarter of 2018 through mid-2020, decreasing from 1.73 to a low of 1.12 by the end of 2020. Following this trough, there was a period of modest recovery and fluctuation, with values rising to 1.32 in the third quarter of 2021 before decreasing again to 1.11 at year-end 2021. Early 2022 shows a slight upward trend, with ratios moving from 1.23 to 1.3 by mid-year, indicating moderate improvement in short-term liquidity.

Quick Ratio

The quick ratio fluctuated within a relatively narrow range over the analyzed period. Starting at 0.62 in the first quarter of 2018, it experienced a decline around early 2019, reaching lows near 0.44 to 0.49. By mid to late 2020, the ratio improved, peaking at approximately 0.6, before falling again in early 2021 to about 0.46. The ratio showed modest recovery through the end of 2021 and maintained a similar level, around 0.48 to 0.55 in the first half of 2022. This pattern reflects variability in liquid assets relative to current liabilities without significant long-term directional change.

Cash Ratio

The cash ratio demonstrated greater volatility and lower overall values compared to the other liquidity ratios. Initially, it increased from 0.3 in early 2018 to a peak of about 0.41 in the third quarter of 2018. Subsequently, there was a pronounced decline in early 2019, with ratios settling around 0.16 to 0.24 through the end of that year. The year 2020 saw temporary improvements, with the ratio rising again to the low 0.30s, followed by a noticeable drop in 2021, reaching lows near 0.16 to 0.18. The first half of 2022 maintained these lower levels around 0.15 to 0.17. This indicates comparatively limited cash coverage of current liabilities and increased reliance on other liquid current assets.

Overall Liquidity Trends

The liquidity metrics reveal a general weakening through 2019 and 2020, with the current and quick ratios showing diminished liquidity positions. The cash ratio's consistent low levels highlight limited immediate cash availability. Some recovery signs appeared in late 2020 and through 2021, though these were not consistently sustained. By mid-2022, the liquidity ratios suggest cautious improvement but still reflect constrained short-term financial flexibility relative to earlier years.

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

Current Assets

Current assets showed a fluctuating but overall upward trend, beginning at approximately 3.84 billion US dollars in the first quarter of 2018. There was moderate growth until late 2019, followed by a temporary decline in late 2019 and early 2020, likely reflecting operational or market conditions. Starting from early 2021, current assets increased significantly, reaching a peak of nearly 7.3 billion US dollars by mid-2022. This increase indicates a strengthening in the company's short-term asset base.

Current Liabilities

Current liabilities exhibited a generally increasing trend over the same timeframe. Beginning near 2.22 billion US dollars in early 2018, liabilities rose albeit with some variability, notably spiking sharply in mid-2020 and continuing to rise thereafter. By mid-2022, current liabilities exceeded 5.6 billion US dollars, reflecting greater obligations that must be met within the short-term.

Current Ratio

The current ratio, a key indicator of liquidity, declined steadily from 1.73 in March 2018 to a low point of around 1.11 to 1.12 in late 2020 and early 2021. This decline indicates a relative decrease in liquidity, as current liabilities grew more rapidly than current assets during this period. Following this trough, the ratio experienced a modest recovery, reaching approximately 1.3 by mid-2022, suggesting some improvement in the company's ability to cover its short-term obligations, although the ratio remains lower than levels seen in early 2018.

Overall, the company faced increasing short-term liabilities alongside growing current assets, leading to a compression of the current ratio during the middle of the period under review. The later partial recovery in the current ratio implies some restoration of liquidity, albeit against a backdrop of substantially higher liabilities and assets. These patterns suggest a dynamic operating environment with challenges to short-term financial stability that are gradually being addressed.

The analysis of the quarterly financial data reveals significant fluctuations in the liquidity position of the company over the observed periods. Key elements reviewed include total quick assets, current liabilities, and the resulting quick ratio.

Total Quick Assets

Total quick assets showed an overall increasing trend despite some volatility. Beginning at approximately $1,368,800 thousand in March 2018, the figure rose with fluctuations, peaking at around $3,091,000 thousand by June 2022. Notable growth was seen in the periods between March 2021 and June 2022, marking a substantial increase from about $1,543,600 thousand to over $3,091,000 thousand. There were intermittent declines observed, such as the drop from December 2018 to March 2019 and again from December 2020 to March 2021, indicating some short-term decreases in liquid assets.

Current Liabilities

Current liabilities generally increased steadily throughout the period under review. Starting at approximately $2,220,500 thousand in March 2018, the figure advanced to $5,632,000 thousand by June 2022. This upward trajectory suggests a growing obligation to meet short-term debts. The liabilities show sharper increases especially from March 2020 onward, with a noticeable jump between December 2021 and June 2022.

Quick Ratio

The quick ratio, which measures the company’s liquidity by comparing quick assets to current liabilities, exhibited a declining and fluctuating pattern that suggests varying liquidity challenges. Initial values near 0.62-0.75 in 2018 decreased to lows around 0.44-0.49 during mid-2019 and early 2021. The ratio briefly improved in several quarters but remained below 1.0 throughout the dataset, indicating that quick assets consistently fell short of covering current liabilities. The lowest ratios were recorded during periods when liabilities spiked more rapidly than quick assets, especially around early 2019 and early 2021. Despite the increase in quick assets towards mid-2022, the quick ratio remained below 1.0 at approximately 0.55, implying liquidity pressures persisted.

In summary, the company faced increasing short-term liabilities over the course of these years, which outpaced the growth in quick assets. While liquid assets generally expanded, the pace was insufficient to maintain a quick ratio above 1, highlighting ongoing challenges in short-term financial liquidity. The fluctuating quick ratio and rising liabilities suggest the need for continued monitoring and possible measures to strengthen short-term financial stability.

Total Cash Assets

Over the course of the observed periods, total cash assets experienced significant fluctuations. Initially, in early 2018, cash assets increased markedly, reaching a peak mid-year before declining by the end of 2018. Following this, the first half of 2019 saw a decrease in cash levels, which were partially restored by the third quarter. A notable surge occurred in mid-2021, corresponding with the highest cash level observed during the entire timeline, followed by a downward correction into mid-2022. This pattern reflects intermittent liquidity adjustments possibly connected to operational and market conditions.

Current Liabilities

Current liabilities progressively increased throughout the timeframe. Starting from just over two billion US dollars in early 2018, liabilities trended upward with occasional periods of stabilization or slight decline, particularly in late 2018 to early 2019. However, from 2020 onward, liabilities rose more sharply, culminating in over five and a half billion US dollars by the middle of 2022. This increasing liability trend suggests growing short-term financial obligations, which could impact working capital and liquidity management.

Cash Ratio

The cash ratio demonstrated variability, reflecting shifts in liquidity relative to current liabilities. Early 2018 saw moderate ratios near 0.3 to 0.4, indicating a stable liquidity position. This dropped significantly in early 2019, aligning with reduced cash assets and elevated liabilities, reaching lows near 0.16. Although a partial recovery in the ratio occurred mid-2019 and mid-2021, the overall trend exhibits a decline by mid-2022 to approximately 0.15, signifying diminishing immediate liquidity coverage for current liabilities.

Overall Insights

The data indicates an overall trend of increasing current liabilities outpacing the growth of cash assets, resulting in a generally declining cash ratio over the period analyzed. Periodic spikes in cash assets fail to sustain proportionate improvement in liquidity ratios due to the persistent rise in liabilities. This may reflect strategic financial management balancing liquidity against operational or investment demands, but it also suggests tightening liquidity conditions and potential vulnerability to short-term financial pressures.