Walt Disney Co. (NYSE:DIS)

The liquidity position, as indicated by the current, quick, and cash ratios, demonstrates a consistent decline over the observed period. Initially, from January 2021 through October 2022, all three ratios exhibited a gradual weakening, though remaining above levels that would immediately signal severe liquidity concerns. However, a more pronounced deterioration became evident from December 2022 onwards, continuing through June 2025.

Current Ratio

The current ratio began at 1.31 in January 2021 and generally decreased, reaching 0.67 in June 2025. The decline was relatively moderate through October 2022, fluctuating between 1.00 and 1.31. A sharper decrease occurred from December 2022 (0.99) to March 2024 (0.75), with limited recovery in subsequent periods. The ratio stabilized somewhat between 0.67 and 0.73 in the latter half of the observation window.

Quick Ratio

Mirroring the current ratio, the quick ratio also showed a downward trend. Starting at 1.17 in January 2021, it decreased to 0.54 by June 2025. The rate of decline accelerated after December 2022, falling from 0.83 to 0.57 by June 2025. Similar to the current ratio, the quick ratio experienced minimal fluctuation in the most recent quarters.

Cash Ratio

The cash ratio exhibited the most significant decline of the three metrics. Beginning at 0.64 in January 2021, it steadily decreased to 0.15 in June 2025. The reduction was consistent throughout the period, with a particularly steep drop observed from October 2022 (0.40) to December 2022 (0.31) and continuing through the remainder of the observation period. This suggests a decreasing ability to cover immediate liabilities with readily available cash.

Collectively, these ratios indicate a weakening short-term solvency position. The consistent declines suggest a potential shift in the company’s working capital management or an increase in short-term obligations relative to liquid assets. The decreasing cash ratio is particularly noteworthy, as it highlights a reduced cushion for meeting immediate financial obligations. Further investigation into the underlying drivers of these trends, such as changes in accounts receivable, inventory, and accounts payable, would be necessary to fully understand the implications.

The current ratio exhibited a generally declining trend over the analyzed period, spanning from January 2021 to March 2025. Initial values indicated a relatively comfortable liquidity position, but subsequent quarters reveal a weakening ability to cover short-term obligations with short-term assets.

Initial Period (Jan 2021 - Oct 2021)

The current ratio began at 1.31 and generally decreased to 1.08 by October 2021. This represents a moderate decline, suggesting a gradual reduction in the company’s short-term liquidity buffer during this timeframe. While still above one, the decreasing trend warrants monitoring.

Stabilization and Slight Improvement (Jan 2022 - Jul 2023)

From January 2022 through July 2023, the current ratio fluctuated between 1.02 and 1.10. This period demonstrates a relative stabilization, with a slight improvement observed in July 2023 reaching 1.07. However, the ratio remained consistently close to the lower end of the acceptable range, indicating limited margin for unexpected short-term liabilities.

Significant Decline (Dec 2023 - Mar 2025)

A more pronounced downward trend emerged starting in December 2023. The current ratio decreased from 0.84 to 0.67 by December 2025, reaching a low of 0.68 in September 2024. This substantial decline suggests a significant deterioration in the company’s short-term liquidity position. The ratio falling below 1.0 indicates that current liabilities exceed current assets, potentially signaling difficulties in meeting short-term obligations without relying on additional financing or asset liquidation. The most recent value, 0.71 in June 2025, offers minimal improvement from the prior low.

Overall, the observed pattern indicates a progressive weakening of the company’s liquidity position. The decline in the current ratio throughout the period, particularly the sharp decrease in the latter portion, suggests increasing financial risk and a potential need for strategic adjustments to improve short-term financial health.

The quick ratio for the analyzed period demonstrates a generally declining trend, with some fluctuations. Initially, the ratio stood at 1.17, indicating a healthy ability to cover short-term liabilities with highly liquid assets. However, over the subsequent quarters, the ratio experienced a gradual decrease, falling to a low of 0.54 by the end of the observed period.

Initial Period (Jan 2, 2021 – Oct 1, 2022)

The quick ratio began at 1.17 and generally decreased, though remaining above 0.83 throughout this period. A slight recovery to 0.98 was observed in January 2022, but the ratio continued its downward trajectory, ending at 0.83 in October 2022. This suggests a moderate weakening in the company’s ability to meet its immediate obligations with its most liquid assets.

Intermediate Period (Dec 31, 2022 – Jun 29, 2024)

A more pronounced decline is evident during this phase. The quick ratio decreased from 0.83 to 0.53. The most significant drop occurred between December 2022 and March 2024, indicating a substantial reduction in the proportion of quick assets available to cover current liabilities. This period reflects a considerable deterioration in short-term liquidity.

Recent Period (Sep 28, 2024 – Jun 28, 2025)

The decline slowed somewhat in the most recent quarters, with the ratio fluctuating between 0.54 and 0.57. While the rate of decrease lessened, the ratio remained consistently below 0.60, suggesting continued pressure on short-term liquidity. A slight increase to 0.55 was observed in June 2025, but this did not reverse the overall downward trend.

Asset and Liability Dynamics

The decrease in the quick ratio is attributable to a combination of factors. Total quick assets experienced a decline from US$31,119 million to US$20,732 million over the period, while current liabilities remained relatively stable, and even increased overall, from US$26,546 million to US$38,046 million. This indicates that liabilities grew at a faster rate than liquid assets, contributing to the weakening quick ratio.

In summary, the quick ratio demonstrates a consistent downward trend over the analyzed period, indicating a diminishing capacity to cover short-term liabilities with readily available assets. The recent stabilization around 0.54 does not negate the overall weakening liquidity position.

The cash ratio exhibited a general declining trend over the observed period, punctuated by some quarterly fluctuations. Initially, the ratio stood at 0.64, indicating a comfortable ability to meet current obligations with available cash. However, a consistent decrease is apparent through the end of 2022, reaching a low of 0.31. A slight recovery is then observed in the first half of 2023, peaking at 0.46, before declining again to 0.23 by the end of that year. This pattern of decline and modest recovery continues into 2024 and the first half of 2025, with the ratio stabilizing around 0.16-0.17 before a slight increase to 0.15 at the final observation point.

Overall Trend

The overall trend demonstrates a weakening in the company’s immediate liquidity position. The ratio’s descent from 0.64 to the range of 0.15-0.17 suggests a growing reliance on other forms of current assets or increased short-term financing to cover current liabilities.

Short-Term Fluctuations

While the long-term trend is downward, quarterly variations are present. The increase from 0.37 in April 2023 to 0.46 in July 2023 suggests a temporary improvement in cash availability, potentially due to seasonal revenue or strategic cash management. Conversely, the sharp drop to 0.23 in December 2023 indicates a significant outflow of cash or a substantial increase in current liabilities during that period.

Recent Performance (2024-2025)

The period from 2024 through the first half of 2025 shows relative stabilization, albeit at a lower level. The cash ratio fluctuates between 0.16 and 0.17, with a final value of 0.15. This suggests that the company has reached a new, lower equilibrium in its short-term liquidity profile. The slight decrease to 0.15 in the final period warrants monitoring to determine if this represents the beginning of another downward trend.

Relationship to Current Liabilities

The declining cash ratio coincides with relatively stable, and sometimes increasing, current liabilities. This indicates that the company’s cash holdings are not keeping pace with its short-term obligations. The consistent level of current liabilities, ranging from approximately 26,500 to 38,000 million US dollars, suggests ongoing operational and financial commitments that require consistent funding.

In conclusion, the observed trend in the cash ratio suggests a gradual erosion of the company’s most liquid assets relative to its immediate obligations. While not immediately alarming, the continued decline warrants further investigation into the underlying causes and potential implications for the company’s financial flexibility.