Time Warner Cable Inc. (NYSE:TWC)

The company's liquidity position experienced a significant contraction between 2011 and 2013, followed by a phased recovery through 2015. The simultaneous decline across all liquidity metrics indicates a period of heightened financial pressure or a strategic shift in capital allocation that reduced short-term asset coverage relative to obligations.

Current Ratio

A marked downward trend is observed from 2011 to 2013, during which the ratio declined from 1.19 to a low of 0.41. This shift indicates a transition from a position of solvency, where current assets covered current liabilities, to a state of significant deficiency. A moderate recovery occurred between 2013 and 2015, with the ratio improving to 0.62 by the end of the period.

Quick Ratio

The quick ratio followed a trajectory nearly identical to the current ratio, falling from 1.11 in 2011 to a trough of 0.28 in 2013. The minimal variance between the current and quick ratios suggests that inventory levels played a negligible role in the company's liquidity profile. The ratio improved to 0.53 by December 31, 2015, though it remained well below the 2011 levels.

Cash Ratio

The most severe deterioration is evident in the cash ratio, which plummeted from 0.96 in 2011 to 0.10 in 2013. This reflects a drastic reduction in the most liquid assets available to meet immediate liabilities. While a recovery trend began in 2014 and reached 0.30 by 2015, the available cash cushion remained substantially diminished compared to the start of the analysis period.

The liquidity profile of the entity exhibited a significant contraction between 2011 and 2013, followed by a period of gradual stabilization through 2015. The overall trend indicates a substantial reduction in the capacity to cover short-term obligations using current assets, although the most severe decline was mitigated in the final two years of the period.

Current Assets

A sharp downward trend occurred between 2011 and 2013, with current assets falling from 6,398 million US$ to a low of 2,144 million US$. This represents a decrease of approximately 66% over a two-year span. A modest recovery followed, with assets increasing to 2,459 million US$ by December 31, 2015.

Current Liabilities

Short-term obligations remained relatively stable between 2011 and 2013, staying within the 5.2 billion to 5.3 billion US$ range. Starting in 2014, a consistent reduction in current liabilities was observed, ending the period at 3,949 million US$ in 2015.

Current Ratio

The current ratio shifted from a healthy position of 1.19 in 2011 to a critical low of 0.41 in 2013, signaling a period of heightened liquidity risk. Although the ratio improved incrementally to 0.52 in 2014 and 0.62 in 2015, it remained below the 1.0 threshold for four consecutive years. This persistent deficit indicates that current liabilities consistently exceeded current assets from 2012 through 2015.

The liquidity position of the entity experienced a significant contraction between 2011 and 2013, followed by a gradual recovery phase from 2014 through 2015. The most critical decline occurred in 2013, where the ability to meet short-term obligations with liquid assets reached its lowest point in the analyzed period.

Quick Ratio Trend

A sharp downward trajectory is observed from 2011 to 2013, with the ratio falling from 1.11 to 0.28. This indicates a shift from a position of liquidity sufficiency, where quick assets exceeded current liabilities, to a state where liquid assets covered less than one-third of short-term obligations. A partial recovery began in 2014, with the ratio increasing to 0.37 and further improving to 0.53 by the end of 2015.

Quick Asset Dynamics

Total quick assets underwent a substantial reduction, plummeting from US$ 5,944 million in 2011 to a minimum of US$ 1,479 million in 2013. This aggressive decline served as the primary driver for the deterioration of the quick ratio. Following the 2013 trough, quick assets showed a steady increase, reaching US$ 2,086 million by 2015.

Current Liabilities Management

Current liabilities remained relatively stable from 2011 through 2013, maintaining a range between US$ 5,226 million and US$ 5,370 million. A notable downward trend in obligations emerged starting in 2014, with liabilities decreasing to US$ 3,949 million by 2015. This reduction in short-term debt contributed to the incremental improvement of the liquidity ratio in the final two years of the period.

An analysis of the liquidity position from 2011 to 2015 reveals a period of significant volatility characterized by a sharp contraction in immediate liquidity followed by a gradual recovery. The company's ability to cover short-term obligations using only cash assets experienced a substantial decline, reaching a critical low in 2013 before showing signs of stabilization and improvement.

Cash Asset Trends

Total cash assets underwent a precipitous decline, falling from 5,177 million US$ in 2011 to a minimum of 525 million US$ in 2013. Following this trough, a recovery trend is observed, with cash assets increasing to 707 million US$ in 2014 and further rising to 1,170 million US$ by the end of 2015.

Current Liabilities Trajectory

Short-term obligations remained relatively stagnant between 2011 and 2013, maintaining levels between 5,226 million US$ and 5,370 million US$. However, a consistent downward trend emerged in the latter two years, with current liabilities decreasing to 4,497 million US$ in 2014 and ending at 3,949 million US$ in 2015.

Cash Ratio Analysis

The cash ratio demonstrates a severe compression, dropping from 0.96 in 2011 to 0.10 in 2013. This decline indicates a significant reduction in the company's immediate liquidity buffer. A partial reversal of this trend occurred between 2014 and 2015, with the ratio improving to 0.30. This recovery was driven by the dual effect of increasing total cash assets and a simultaneous reduction in current liabilities.