Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
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- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Operating Profit Margin since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Price to Sales (P/S) since 2005
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Liquidity Ratios (Summary)
Reynolds American Inc., liquidity ratios
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Current ratio | ||||||
| Quick ratio | ||||||
| Cash ratio |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
- Current Ratio
- The current ratio demonstrates a fluctuating trend over the five-year period. Starting at 1.28 in 2012, it decreased to 1.19 in 2013 and further declined to below 1.0 at 0.94 in 2014, indicating potential liquidity concerns that year. However, it improved to 1.17 in 2015 before dropping again to 0.85 in 2016, suggesting a weakening short-term liquidity position toward the end of the period.
- Quick Ratio
- The quick ratio consistently declined from 0.72 in 2012 to a low of 0.32 in 2014, reflecting a significant reduction in the company's ability to cover immediate liabilities without relying on inventory. Although there was a partial recovery to 0.54 in 2015, it fell again to 0.45 in 2016, indicating persistent constraints in liquid assets relative to current liabilities.
- Cash Ratio
- The cash ratio followed a similar downward trajectory, decreasing from 0.66 in 2012 to 0.27 in 2014. This decline highlights a reduced availability of cash and cash equivalents to satisfy short-term obligations. The ratio improved slightly to 0.51 in 2015 before declining again to 0.41 in 2016, suggesting that while cash reserves temporarily strengthened, overall cash liquidity remained subdued by the end of the period.
Current Ratio
Reynolds American Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Current ratio1 | ||||||
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
| Philip Morris International Inc. | ||||||
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
1 2016 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- There was a noticeable decline in current assets from 4,812 million USD at the end of 2012 to 3,323 million USD by the end of 2014. This was followed by a significant increase to 6,187 million USD in 2015, before decreasing again to 4,238 million USD in 2016.
- Current Liabilities
- Current liabilities showed some fluctuations over the period. They decreased from 3,769 million USD in 2012 to 3,076 million USD in 2013, then increased to 3,544 million USD in 2014. A sharp rise was observed in 2015 to 5,291 million USD, followed by a slight decline to 4,985 million USD in 2016.
- Current Ratio
- The current ratio exhibited a declining trend overall. Starting at a ratio of 1.28 in 2012, it decreased to 0.94 by 2014, indicating a reduction in short-term liquidity. Although there was a temporary improvement to 1.17 in 2015, the ratio dropped again to 0.85 in 2016, representing potential challenges in meeting short-term obligations.
Quick Ratio
Reynolds American Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | ||||||
| Short-term investments | ||||||
| Accounts receivable | ||||||
| Accounts receivable, related party | ||||||
| Notes receivable | ||||||
| Other receivables | ||||||
| Total quick assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Quick ratio1 | ||||||
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
| Philip Morris International Inc. | ||||||
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
1 2016 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets demonstrated a decreasing trend from 2012 to 2014, declining from 2701 million US dollars in 2012 to 1135 million US dollars in 2014. However, there was a notable recovery in 2015 when quick assets rose sharply to 2857 million US dollars, followed by a moderate decrease to 2240 million US dollars in 2016.
- Current liabilities
- Current liabilities exhibited fluctuations over the analyzed period. Starting at 3769 million US dollars in 2012, they decreased to 3076 million US dollars in 2013. Subsequently, current liabilities increased to 3544 million US dollars in 2014, then rose significantly to 5291 million US dollars in 2015, before slightly decreasing to 4985 million US dollars in 2016.
- Quick ratio
- The quick ratio experienced an overall downward trend throughout the period. It started at 0.72 in 2012, dropping substantially to 0.32 by 2014. Despite some improvement to 0.54 in 2015, it declined again to 0.45 in 2016. This indicates a generally weakening short-term liquidity position, with the company's ability to cover current liabilities with quick assets deteriorating, except for a temporary improvement in 2015.
Cash Ratio
Reynolds American Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | ||||||
| Short-term investments | ||||||
| Total cash assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Cash ratio1 | ||||||
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
| Philip Morris International Inc. | ||||||
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
1 2016 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total cash assets
- The total cash assets exhibited a declining trend from 2012 through 2014, decreasing from 2,502 million USD to 966 million USD. In 2015, there was a notable rebound to 2,716 million USD, representing the highest cash level in the observed period. However, in 2016, cash assets decreased again to 2,051 million USD, though remaining above the levels recorded in 2013 and 2014.
- Current liabilities
- Current liabilities showed some fluctuation but generally increased over the period. From 3,769 million USD at the end of 2012, liabilities declined to 3,076 million USD in 2013, followed by a rise to 3,544 million USD in 2014. A significant increase occurred in 2015, reaching 5,291 million USD, which was the peak within the timeframe. In 2016, current liabilities slightly decreased to 4,985 million USD but remained substantially higher than the initial years.
- Cash ratio
- The cash ratio, which measures liquidity by comparing cash assets to current liabilities, declined from 0.66 in 2012 to its lowest point of 0.27 in 2014. This indicates reduced short-term liquidity over these years. The ratio improved to 0.51 in 2015 concurrent with the increase in cash assets, enhancing liquidity. Nonetheless, it decreased again to 0.41 in 2016, reflecting a moderate contraction in liquidity compared to the previous year but still higher than the 2014 trough.