Walt Disney Co. (NYSE:DIS)

The analysis of the financial ratios over the reported periods reveals several noteworthy trends in the liquidity position. The current ratio exhibits fluctuating movements, initially declining from 1.00 at the end of 2018 to a low point around mid-2019 before increasing significantly to levels above 1.30 by the middle of 2020. Following this peak, there is a gradual reduction back toward levels near 1.00 by the end of 2022, with a further decline observed through 2024, dropping below 0.75 in the most recent quarters. This suggests a decreasing ability to cover short-term liabilities with current assets as time progresses, particularly in the latest periods.

Similarly, the quick ratio follows a comparable pattern but remains consistently below the current ratio, reflecting the exclusion of inventory from liquid assets. The quick ratio decreases from 0.83 at the end of 2018 to values near 0.50-0.60 by mid-2019, surges to a peak of approximately 1.16-1.17 in late 2020 and early 2021, and then trends downward again, falling below 0.60 in the latest quarters. This indicates that the company's ability to meet immediate obligations using the most liquid assets has weakened over recent periods.

The cash ratio shows more pronounced volatility, with relatively low values around 0.15-0.25 through early 2019, increasing sharply to 0.75 in mid-2020, likely reflecting a surge in cash or cash equivalents during that time. Afterwards, a steady decline is noticeable, with the ratio settling around 0.40 by late 2022 and then decreasing further to approximately 0.16 by the end of the most recent period. This pattern indicates that the proportion of cash and cash equivalents relative to current liabilities improved temporarily but has waned considerably over the last few years.

Current Ratio

Displays a general trend of initial decline followed by recovery and a peak in 2020, then a steady decrease below 1.00 in the most recent years, implying reduced short-term liquidity coverage over time.

Quick Ratio

Follows a similar trajectory to the current ratio, with peaks exceeding 1.10 in 2020-2021 before declining below 0.60 most recently, signaling weakening quick asset coverage of current liabilities.

Cash Ratio

Exhibits significant volatility with a strong increase to 0.75 in mid-2020, followed by a persistent decline to approximately 0.16, suggesting diminishing cash reserves relative to obligations.

Overall, the liquidity ratios indicate that while there was a temporary strengthening of the liquidity position around 2020, the company's short-term financial flexibility has diminished notably in subsequent years. The declines in all three ratios in the most recent quarters highlight potential concerns regarding the ability to meet short-term liabilities from current and liquid assets. This trend warrants attention to ensure adequate liquidity is maintained going forward.

Current Assets Trend

Current assets have exhibited notable fluctuations across the periods analyzed. Beginning at approximately 17.5 billion USD in late 2018, there was a substantial increase to over 34 billion USD in early 2019. This level remained relatively elevated through mid-2020, peaking around 41.3 billion USD in June 2020. Subsequently, a consistent downward trend is observed, with current assets declining gradually to about 23.8 billion USD by mid-2025. The initial sharp rise may reflect asset accumulation or changes in operational cycles, but the later decline suggests tightening asset levels or adjustments in working capital.

Current Liabilities Trend

Current liabilities also showed variation, starting near 17.6 billion USD in late 2018 and increasing steeply to approximately 44.4 billion USD by March 2019. After this peak, liabilities fluctuated but generally decreased until October 2020, reaching around 26.6 billion USD. From early 2021 onwards, a gradual increase is evident, with liabilities reaching roughly 35 billion USD by mid-2025. This pattern indicates varying short-term obligations, possibly related to financing strategies or operational demands.

Current Ratio Trend

The current ratio began at a neutral level of 1.0 in late 2018, dipped below 1.0 during much of 2019 and early 2020, hitting lows around 0.7, indicating a tighter liquidity position. There was a pronounced improvement starting mid-2020, with the ratio climbing above 1.3, suggesting better short-term financial health during that period. However, from 2021 onward, the current ratio gradually declined again, descending below 1.0 by early 2023 and further dropping toward approximately 0.7 by mid-2025. The oscillation in the current ratio reflects shifts in liquidity management, with periods of increased cushion followed by tightening of current asset coverage relative to current liabilities.

Overall Insights

The data indicates a period of aggressive increase in both current assets and liabilities around 2019, followed by a phase of relative stabilization and then a downward correction for assets but an upward trend for liabilities into the later periods. The current ratio’s movement aligns with these changes, initially declining during asset and liability build-up, improving when assets were at peak levels exceeding liabilities significantly, and then weakening as liabilities increased while assets contracted. This suggests that the company’s short-term liquidity was strongest in mid-2020, but has been tightening thereafter, which could have implications for working capital management and financial flexibility.

Total quick assets

The total quick assets value exhibits notable fluctuations over the observed periods. Initially, there is an increase from 14,578 million USD in late 2018 to a peak of 35,737 million USD by mid-2020. Following this peak, a general declining trend is observed, with values decreasing steadily to around 18,769 million USD by mid-2025. This pattern suggests a significant accumulation of liquid assets during the early 2020 phase, possibly in response to external factors, followed by a gradual reduction over subsequent quarters.

Current liabilities

Current liabilities show considerable volatility throughout the timeline. The values surge early on, reaching a maximum of 44,593 million USD by the second quarter of 2019, then oscillate around the 27,000 to 35,000 million USD range. Notably, there is a general upward shift again after 2020, with liabilities rising from approximately 26,628 million USD in late 2020 to highs near 35,612 million USD during late 2024. Towards mid-2025, a mild reduction is visible, yet liabilities remain elevated compared to the initial periods.

Quick ratio

The quick ratio metric indicates changes in short-term liquidity relative to current liabilities. Initially below 1.0, reaching as low as 0.50 in mid-2019, the ratio improves significantly during 2020, peaking above 1.15 in the third quarter of 2020. This improvement aligns with the peak in quick assets and a relative reduction in current liabilities. Subsequently, a declining trend follows, with the quick ratio decreasing steadily from 0.94 at the start of 2022 to a trough near 0.53 by late 2024. A slight recovery near 0.57 is noted by mid-2025. Overall, the quick ratio remains below 1.0 for the majority of the later periods, indicating a conservative short-term liquidity position.

Summary insights

The company experienced a pronounced increase in liquid assets and improved liquidity ratios during 2019–2020, potentially reflecting strategic asset management during a period of external challenges. Despite this, current liabilities remained elevated, suggesting increased short-term obligations. Following this peak, liquid assets declined significantly while liabilities remained relatively high, contributing to a contraction in the quick ratio. The overall trend indicates a tightened liquidity position in recent years, highlighting potential areas for monitoring working capital and managing short-term financial obligations.

The financial data reveals several notable trends over the observed quarters.

Total cash assets

There was a significant increase in total cash assets from the end of 2018 through mid-2020, rising from approximately 4,455 million US dollars to a peak of over 23,000 million US dollars by June 2020. Following this peak, cash assets generally trended downward, reaching levels near 5,300 to 6,000 million US dollars by mid-2025. This suggests a period of substantial cash accumulation, possibly related to strategic liquidity management, followed by a gradual decline over subsequent quarters.

Current liabilities

Current liabilities fluctuated considerably, starting around 17,600 million US dollars at the end of 2018 and increasing sharply to a plateau between 30,000 and 35,000 million US dollars through most of the periods from 2019 to 2025. There was a slight decrease in liabilities in early 2023 but the level remained elevated compared to the initial period. This pattern indicates sustained high short-term obligations throughout the timeframe.

Cash ratio

The cash ratio exhibited initial low values near 0.15 to 0.25 until early 2019, followed by a pronounced rise to a peak of 0.75 in mid-2020. After reaching this peak, the ratio declined steadily, falling below 0.2 by mid-2024 and persisting at this lower level through subsequent quarters. This trend suggests that the proportion of cash to current liabilities improved significantly during the early 2020 period but later returned to a more constrained liquidity position relative to liabilities.

Overall, the data indicates a phase where liquidity was strongly bolstered, likely in response to external economic conditions or corporate strategy, with a peak in cash resources relative to liabilities occurring in mid-2020. Subsequently, the company’s liquidity ratio decreased, in spite of current liabilities remaining relatively stable at elevated levels. This could imply increased utilization of cash reserves or changes in working capital management post-2020.