Philip Morris International Inc. (NYSE:PM)

The analysis of the liquidity ratios over the observed quarterly periods reveals certain patterns and fluctuations in the company's short-term financial health.

Current Ratio

The current ratio started slightly above 1.0 in early 2020, indicating a modest margin of current assets over current liabilities. It peaked around the first half of 2021, reaching approximately 1.18, suggesting improved liquidity during that time. Subsequently, there was a downward trend with some volatility, dipping below 1.0 in the later quarters of 2021 and continuing to fluctuate around values between 0.7 and 0.9. This indicates a contraction in the company's ability to cover current liabilities with current assets as time progressed, which might warrant close monitoring.

Quick Ratio

The quick ratio exhibited a similar pattern but with generally lower values, consistent with its calculation method excluding inventories. From about 0.43 in early 2020, it improved slightly through mid-2021, aligning with the positive trend in the current ratio. However, after this period, it experienced a decline reaching lows near 0.29 to 0.31, particularly around late 2022 and early 2023. Although there was some recovery observed in mid-2024, the ratio mostly hovered below 0.5, indicating relatively lower availability of liquid assets to cover current liabilities.

Cash Ratio

The cash ratio, representing the strictest liquidity measure, remained the lowest among the three. It initially rose from 0.23 in early 2020 to around 0.37 by the end of that year, reflecting improved cash and cash-equivalents relative to current liabilities. From 2021 onward, the ratio trended downward with intermittent minor recoveries but generally falling below 0.2 in several quarters, notably in late 2022 and early 2023, and again in later periods. This pattern suggests a reduction in readily available cash to meet current obligations, which could signal tighter cash management or changes in operational cash flows.

Overall, the data depicts a period of relative liquidity strength in early to mid-2021 across all three ratios, followed by a gradual weakening in subsequent years. The consistent decline, particularly in the current and quick ratios, points to a potential tightening of the company’s short-term financial flexibility. The cash ratio's decline accentuates concerns over immediate liquidity. These trends should be considered in the context of broader operational and financial strategies to ensure continued financial stability.

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

Current Assets

The current assets exhibit fluctuations with an overall upward trend from approximately 16,861 million US dollars at the beginning of the period to a peak exceeding 23,000 million US dollars in the later periods. Notable increases are observed particularly towards the end of the timeline, signifying a strengthening in the company's short-term asset base.

Current Liabilities

Current liabilities also demonstrate variability, starting around 16,584 million US dollars and rising significantly at various points, reaching values above 28,000 million US dollars in some of the latest quarters. This indicates periods of increased obligations payable within a year, potentially reflecting strategic financing or operational expenditures.

Current Ratio

The current ratio, a key indicator of short-term liquidity, generally hovers close to or slightly above 1 in the early periods, suggesting adequate coverage of current liabilities by current assets. However, from mid-2021 onward, the ratio declines often falling below 1, with some quarters showing ratios as low as approximately 0.72. This decline highlights a shift towards tighter liquidity and reduced cushion to meet short-term obligations, potentially signaling increased liquidity risk or changes in working capital management.

In summary, while current assets have grown somewhat over the period, current liabilities have increased at a relatively faster pace in recent quarters. Consequently, the current ratio trend indicates a gradual weakening in the company's liquidity position, requiring management attention to maintain operational and financial stability.

The financial data over the examined periods reveals several notable trends in liquidity and short-term financial position indicators. The analysis focuses on total quick assets, current liabilities, and the resulting quick ratio to assess the company’s ability to meet immediate obligations without relying on inventory sales.

Total Quick Assets

Total quick assets demonstrated fluctuations, generally ranging between approximately $7 billion and $10 billion. An initial increase was observed in 2020, peaking near the end of that year. However, subsequent quarters exhibited variability with some downward adjustments, particularly noticeable at the end of 2022 and early 2023. Later periods reveal a tendency to recover, reaching peak values around mid-2024, before experiencing slight declines toward the latest reported dates.

Current Liabilities

Current liabilities displayed an upward trajectory over the entire period, rising from about $16.6 billion in early 2020 to nearly $28 billion during parts of 2024 and 2025. This continuous increase suggests growing short-term obligations that may exert pressure on liquidity resources. Notable leaps occurred during late 2022 and early 2023, where liabilities surged significantly and remained elevated through subsequent periods.

Quick Ratio

The quick ratio consistently remained below 1.0 throughout, indicating that quick assets did not cover current liabilities fully at any time. The ratio improved slightly from early 2020 until late 2020, climbing from 0.43 to around 0.56. However, starting in 2021, the ratio declined gradually with occasional minor recoveries, reaching a low near 0.28 in early 2023. Despite some improvement afterward, the ratio remained below 0.5, fluctuating mostly between 0.3 and 0.44 and showing a slight decline towards the end of the period.

In summary, the company’s quick asset base has shown some resilience but is insufficient relative to the growth in current liabilities, leading to a consistently low quick ratio. The increasing current liabilities alongside relatively stagnant or mildly fluctuating quick assets imply higher short-term liquidity risk. Maintaining or improving liquidity may require management attention, particularly considering the downward trends in the quick ratio during recent periods.

The financial data reveals notable fluctuations and trends in key liquidity indicators over the analyzed periods.

Total Cash Assets

Total cash assets exhibit variability across the quarters, reaching a peak at the end of 2020 with 7,280 million US dollars. Subsequently, a decline is observed in early 2022, dipping to as low as approximately 2,428 million US dollars in the second quarter of 2023. After this trough, the cash assets slightly recover, moving back above 4,000 million US dollars by the last quarters of 2025. This pattern suggests periods of cash accumulation followed by significant drawdowns, potentially related to operational needs or investment activities.

Current Liabilities

Current liabilities have generally increased over time, starting around 16,584 million US dollars in the first quarter of 2020 and escalating to a peak exceeding 28,000 million US dollars by mid-2025. The upward trend is marked by occasional spikes, such as at the end of 2022 and the middle of 2025, indicating a growing short-term obligation burden. This consistent growth in current liabilities may reflect increased financing, operational costs, or shifts in working capital requirements.

Cash Ratio

The cash ratio, representing the proportion of cash assets relative to current liabilities, shows a declining trend over the analyzed period. Initially, it rises from 0.23 in early 2020 to 0.37 by the end of 2020, indicating improving immediate liquidity. However, from 2021 onwards, it declines progressively to a low of around 0.11-0.12 during 2022 and early 2023, suggesting reduced coverage of current liabilities by cash on hand. There is a moderate recovery towards the end of the analyzed timeline, where the ratio stabilizes marginally above 0.15. Despite this recovery, the overall lower ratios in recent years point to reduced liquidity buffers.

In summary, the company’s liquidity profile shows increasing short-term liabilities accompanied by fluctuating but generally decreasing cash asset levels relative to these liabilities. The downward shift in the cash ratio highlights a decline in liquid asset coverage of short-term obligations over time, which may indicate heightened liquidity risk or strategic changes in cash management policies.