Procter & Gamble Co. (NYSE:PG)

The liquidity ratios across the reported quarters reveal several noteworthy trends and patterns. The current ratio, which measures the company's ability to cover short-term liabilities with short-term assets, exhibited fluctuations with an overall moderate recovery towards the later periods. It started at 0.72 in September 2019, declined to a low of 0.56 by December 2022, indicating tighter liquidity, and then showed a gradual improvement, reaching 0.76 in December 2024 before tapering off slightly thereafter.

The quick ratio, a more stringent measure that excludes inventory from current assets, followed a similar trajectory with greater volatility. Beginning at 0.48 in September 2019, the quick ratio declined to a low of 0.33 in December 2022, reflecting reduced liquid asset coverage for immediate liabilities. Subsequently, this ratio increased moderately, peaking at 0.51 in December 2024 before a slight decrease in the final quarters.

The cash ratio, which focuses solely on the most liquid assets, cash and cash equivalents, presented the most pronounced variations over the time frame. Initial levels were at 0.31 in September 2019, with a notable increase to 0.49 in June 2020, likely reflecting a cash accumulation phase. However, this ratio decreased steadily afterward, reaching a low of 0.18 by September and December 2022, signifying a drawdown of cash reserves. A rebound was observed through the next two years, peaking at 0.33 in December 2024, followed by a minor decline toward the end of the period.

Overall, the data indicate that the company experienced a period of tightening liquidity around late 2022, with lower ratios suggesting more constrained ability to meet short-term obligations. However, the subsequent quarters evidenced a recovery trend across all liquidity measures, suggesting improved short-term financial flexibility. Despite this improvement, the ratios remained below or near bounds that may be considered conservative, indicating a generally cautious liquidity position throughout the observed period.

Current Ratio

Moderate fluctuations with an overall trough in late 2022, followed by gradual recovery until late 2024.

Quick Ratio

Greater volatility, bottoming out in late 2022, then improving but not surpassing early period highs.

Cash Ratio

Largest variation with an early peak during mid-2020, a marked decline through late 2022, and a partial rebound afterward.

The analysis of the quarterly financial data reveals several notable trends in the liquidity position over the examined periods.

Current Assets

Current assets experienced fluctuations throughout the time frame. Initially, the value decreased from approximately 21,925 million US dollars in September 2019 to a low near 18,917 million in December 2019. This was followed by a significant increase reaching a peak of around 27,140 million in March 2020. Subsequently, current assets generally declined with some volatility until stabilizing within a range of about 21,000 to 25,000 million in the most recent quarters. A mild upward trend can be observed towards the latest periods, with current assets rising back above 25,000 million.

Current Liabilities

Current liabilities consistently remained higher than current assets throughout the periods examined. Values started around 30,253 million in September 2019 and showed an increasing trajectory with several fluctuations. The liabilities peaked notably around the end of 2021, reaching levels above 38,000 million, and though there was some contraction afterwards, current liabilities have generally stayed elevated, oscillating mostly between 33,000 and 37,000 million in recent quarters.

Current Ratio

The current ratio indicates liquidity and the ability to cover short-term obligations with current assets. Initially, the ratio was relatively low, at 0.72 in September 2019, before declining further to a trough of 0.56 in December 2022, suggesting diminished short-term liquidity during that period. Since then, an improvement is visible, with the ratio gradually increasing and reaching approximately 0.76 by December 2024. Despite this improvement, the ratio remains below 1.0 throughout, implying that current liabilities consistently exceed current assets, pointing to a liquidity concern that persists over the entire timeframe.

Overall, the data portrays a company managing through volatile conditions affecting its current assets and liabilities. While there is some recovery in liquidity ratios by the end of the observed timeline, maintaining a current ratio below 1 suggests ongoing pressure in meeting short-term obligations. This trend necessitates careful cash flow and working capital management to ensure sufficient liquidity.

The analysis of the quarterly data reveals notable fluctuations and patterns in liquidity metrics over the observed periods. The key financial indicators reviewed include total quick assets, current liabilities, and the quick ratio.

Total Quick Assets

Total quick assets display significant volatility during the timeframe. Starting at 14,447 million US dollars in September 2019, the figure increased sharply to 20,033 million by March 2020, maintaining a similar level through June 2020. Following this peak, a gradual decline is observed through late 2021 and into 2022, with amounts falling to around 12,357 to 12,621 million dollars. Thereafter, quick assets experience a recovery phase, reaching approximately 15,948 million in September 2023, before another decline ensues towards the end of the period, ending near 15,741 million by June 2025. This pattern indicates disruptions likely linked to external factors followed by partial recovery phases in liquidity.

Current Liabilities

Current liabilities show an overall increasing trend from 30,253 million in September 2019, peaking at 38,027 million in December 2021. Post this peak, current liabilities moderate somewhat but remain significantly elevated, fluctuating between roughly 33,000 and 36,000 million dollars through mid-2025. This persistent high liability level suggests sustained short-term obligations possibly driven by higher operational costs or financing activities.

Quick Ratio

The quick ratio, which measures the ability to meet short-term obligations with quick assets, generally follows a declining trajectory from 0.48 in September 2019 to a low of 0.33 in December 2022. This decline corresponds with the reductions in quick assets and the increase in current liabilities. Starting in early 2023, a partial recovery is evident as the ratio climbs back to around 0.51 by September 2024, before slightly decreasing again to about 0.44 by mid-2025. Despite some recovery, the quick ratio remains below 0.5 for much of the period, indicating that the company’s liquidity position has been under pressure and quick assets have been insufficient to cover current liabilities fully.

In summary, the company’s liquidity profile across the observed quarters shows initial strength with high quick assets early on but faces downward pressure as quick assets declined and liabilities grew. Although there was some recovery in liquidity ratios in the later periods, the quick ratio staying below 1.0 indicates continuing challenges in meeting short-term obligations solely through liquid assets. The trends suggest that while some corrective measures may have been implemented, the overall liquidity position requires ongoing attention.

Total cash assets

The total cash assets exhibit noticeable fluctuations over the observed periods. Starting at 9,304 million US dollars in September 2019, the cash position declined to 6,279 million by December 2019, then increased sharply to 15,393 million in March 2020 and peaked again slightly in June 2020 at 16,181 million. Following this peak, there is a general downward trend through 2022, reaching a low of 6,710 million in September 2022. Subsequently, cash assets gradually recovered, reaching 9,733 million by September 2023. The data from the last four quarters reveal volatility with values fluctuating between 6,828 million and 12,156 million, showing no clear sustained upward or downward trend toward the end of the period.

Current liabilities

Current liabilities remain relatively elevated and display a general upward trend with some cyclical variations. Starting at 30,253 million US dollars in September 2019, current liabilities fluctuated mildly around the 30,000–33,000 million range during 2019 and early 2020. There is a noticeable increase beginning in late 2020 where the liabilities jump to over 36,000 million by September 2021. Afterward, there is variability but overall, the level remains elevated, staying mostly above 33,000 million and reaching up to 38,746 million in December 2022. The most recent periods show current liabilities fluctuating between approximately 33,000 million and 36,400 million, indicating sustained high short-term obligations without significant reductions.

Cash ratio

The cash ratio, representing the liquidity coverage of current liabilities by cash assets, moves consistently at relatively low levels throughout the timeline. Initial values in late 2019 are between 0.2 and 0.31, peaking at 0.49 in June 2020, corresponding with the peak in cash assets at that time. Post-mid 2020, the cash ratio trends downward, reaching a low of 0.18 in both September and December 2022. Thereafter, a gradual recovery is observed, pushing the ratio back above 0.3 in the latter part of 2023 and early 2024. However, the ratio experiences moderate declines again in the most recent quarters, stabilizing near 0.27 by June 2025. Overall, the liquidity position as measured by this ratio remains modest, implying limited cash on hand relative to short-term liabilities.

General observations

The data suggest that cash management has been variable, with significant peaks early in the pandemic period likely in response to uncertain market conditions. This was followed by a contraction in cash reserves as operational activities and liabilities increased. The cash ratio movements mirror the cash assets trend but remain low, indicating the company consistently operates with a relatively high level of current liabilities compared to liquid cash. This may point to reliance on other current assets, credit lines, or short-term financing to meet obligations. The elevated current liabilities imply sustained working capital requirements or financial leverage that might warrant monitoring for changes in credit risk or liquidity pressures.