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Diageo PLC (NYSE:DEO)
Cash, Cash Equivalents, Marketable Securities
$807 Mil (As of Jun. 2015)

Diageo PLC's quarterly cash, cash equivalents, marketable securities increased from Jun. 2014 ($1,252.12 Mil) to Dec. 2014 ($1,433.49 Mil) but then declined from Dec. 2014 ($1,433.49 Mil) to Jun. 2015 ($806.85 Mil).

Diageo PLC's annual cash, cash equivalents, marketable securities declined from Jun. 2013 ($2,843.65 Mil) to Jun. 2014 ($1,252.12 Mil) and declined from Jun. 2014 ($1,252.12 Mil) to Jun. 2015 ($806.85 Mil).


Definition

Cash and cash equivalents are the most liquid assets on the balance sheet. Cash equivalents are assets that are readily convertible into cash, such as money market holdings, short-term government bonds or Treasury bills, marketable securities and commercial paper.

Marketable Securities are very liquid securities that can be converted into cash quickly at a reasonable price.


Explanation

Marketable securities are very liquid as they tend to have maturities of less than one year. Furthermore, the rate at which these securities can be bought or sold has little effect on their prices.

A high number means either:

1) The company has competitive advantage generating lots of cash

2) Just sold a business or bonds (not necessarily good)

A low stockpile of cash usually means poor to mediocre economics.

There are 3 ways to create large cash reserve.

1) Sell new bonds or equity to public

2) Sell business or asset

3) It has an ongoing business generating more cash than it burns (usually means durable competitive advantage)

When a company is suffering a short term problem, Buffett looks at cash or marketable securities to see whether it has the financial strength to ride it out.

Important: Lots of cash and marketable securities + little debt = good chance that the business will sail on through tough times.

Test to see what is creating cash by looking at past 7 yrs of balance sheets. This will reveal how the cash was created.


Related Terms

Cash and Cash Equivalents, Marketable Securities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Diageo PLC Annual Data

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15
Cash, Cash Equivalents,
Marketable Securities
1,2901,7591,6071,6562,4562,7121,7392,8441,252807

Diageo PLC Semi-Annual Data

Jun11Dec11Jun12Dec12Jun13Dec13Jun14Dec14Jun15Dec15
Cash, Cash Equivalents,
Marketable Securities
2,7121,8051,7391,2372,8441,6691,2521,4338071,141
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