Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Biogen Inc., liquidity ratios
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Current ratio | 1.83 | 1.84 | 1.72 | 2.32 | 2.34 | |
| Quick ratio | 1.34 | 1.32 | 1.43 | 1.83 | 1.78 | |
| Cash ratio | 0.88 | 0.70 | 0.92 | 1.07 | 1.10 |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The liquidity profile from 2017 to 2021 exhibits a general downward trend, although all primary indicators remain above 1.0 for the majority of the period, suggesting a sustained ability to meet short-term obligations.
- Current Ratio
- A contraction is observed from a peak of 2.34 in 2017 to 1.83 in 2021. The most significant decrease occurred between 2018 and 2019, where the ratio dropped from 2.32 to 1.72. Following this decline, the ratio stabilized, remaining between 1.83 and 1.84 through 2020 and 2021.
- Quick Ratio
- The quick ratio followed a similar trajectory to the current ratio, peaking at 1.83 in 2018 before declining to 1.34 by 2021. The decline from 2018 to 2020 indicates a reduction in the availability of highly liquid assets relative to current liabilities, though the ratio remains comfortably above the 1.0 threshold.
- Cash Ratio
- The most pronounced decline is evident in the cash ratio, which fell from 1.10 in 2017 to a low of 0.70 in 2020. This represents a transition from a position where cash and equivalents alone could fully cover current liabilities to a position of partial coverage. A partial recovery was noted in 2021, with the ratio increasing to 0.88.
Overall, the divergence between the current ratio and the cash ratio suggests a growing reliance on non-cash current assets to support liquidity. While the absolute values of all three ratios have diminished since 2017, the company maintains a liquid position capable of servicing its immediate financial commitments.
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Current Ratio
Biogen Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 7,856,500) | 6,887,100) | 8,381,800) | 7,640,900) | 7,873,300) | |
| Current liabilities | 4,298,200) | 3,742,200) | 4,863,800) | 3,295,200) | 3,368,200) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 1.83 | 1.84 | 1.72 | 2.32 | 2.34 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| AbbVie Inc. | 0.79 | — | — | — | — | |
| Amgen Inc. | 1.59 | — | — | — | — | |
| Bristol-Myers Squibb Co. | 1.52 | — | — | — | — | |
| Danaher Corp. | 1.43 | — | — | — | — | |
| Eli Lilly & Co. | 1.23 | — | — | — | — | |
| Gilead Sciences Inc. | 1.27 | — | — | — | — | |
| Johnson & Johnson | 1.35 | — | — | — | — | |
| Merck & Co. Inc. | 1.27 | — | — | — | — | |
| Pfizer Inc. | 1.40 | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 3.56 | — | — | — | — | |
| Thermo Fisher Scientific Inc. | 1.50 | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | 4.46 | — | — | — | — | |
| Current Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 1.36 | — | — | — | — | |
| Current Ratio, Industry | ||||||
| Health Care | 1.31 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Current ratio = Current assets ÷ Current liabilities
= 7,856,500 ÷ 4,298,200 = 1.83
2 Click competitor name to see calculations.
An analysis of the liquidity position from 2017 to 2021 reveals a general contraction in the current ratio, although the company maintained a sufficient cushion of current assets over current liabilities throughout the entire period.
- Current Assets Trends
- Current assets exhibited fluctuations over the five-year period. After a slight decrease between 2017 and 2018, assets peaked in 2019 at 8,381,800 thousand US dollars. A significant decline followed in 2020, reaching a period low of 6,887,100 thousand US dollars, before recovering to 7,856,500 thousand US dollars by the end of 2021.
- Current Liabilities Trends
- Current liabilities remained relatively stable during 2017 and 2018, but experienced a substantial increase in 2019, rising to 4,863,800 thousand US dollars. While liabilities decreased in 2020, they trended upward again in 2021, ending at 4,298,200 thousand US dollars.
- Current Ratio Interpretation
- The current ratio began at a strong 2.34 in 2017 and 2.32 in 2018, indicating a high capacity to cover short-term obligations. A notable reduction occurred in 2019, with the ratio dropping to 1.72, primarily driven by the spike in current liabilities. Following this decline, the ratio stabilized, remaining within a narrow range of 1.83 to 1.84 during 2020 and 2021, suggesting a consistent, albeit lower, liquidity profile compared to the initial two years of the period.
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Quick Ratio
Biogen Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 2,261,400) | 1,331,200) | 2,913,700) | 1,224,600) | 1,573,800) | |
| Marketable securities | 1,541,100) | 1,278,900) | 1,562,200) | 2,313,400) | 2,115,200) | |
| Accounts receivable, net | 1,549,400) | 1,913,800) | 1,880,500) | 1,958,500) | 1,787,000) | |
| Due from anti-CD20 therapeutic programs | 412,300) | 413,500) | 590,200) | 526,900) | 532,600) | |
| Total quick assets | 5,764,200) | 4,937,400) | 6,946,600) | 6,023,400) | 6,008,600) | |
| Current liabilities | 4,298,200) | 3,742,200) | 4,863,800) | 3,295,200) | 3,368,200) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 1.34 | 1.32 | 1.43 | 1.83 | 1.78 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| AbbVie Inc. | 0.56 | — | — | — | — | |
| Amgen Inc. | 1.06 | — | — | — | — | |
| Bristol-Myers Squibb Co. | 1.20 | — | — | — | — | |
| Danaher Corp. | 0.89 | — | — | — | — | |
| Eli Lilly & Co. | 0.79 | — | — | — | — | |
| Gilead Sciences Inc. | 0.95 | — | — | — | — | |
| Johnson & Johnson | 1.04 | — | — | — | — | |
| Merck & Co. Inc. | 0.73 | — | — | — | — | |
| Pfizer Inc. | 1.00 | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 2.98 | — | — | — | — | |
| Thermo Fisher Scientific Inc. | 1.00 | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | 4.04 | — | — | — | — | |
| Quick Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 0.98 | — | — | — | — | |
| Quick Ratio, Industry | ||||||
| Health Care | 1.00 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 5,764,200 ÷ 4,298,200 = 1.34
2 Click competitor name to see calculations.
The liquidity position of the entity exhibits a general downward trend in the quick ratio over the five-year period ending December 31, 2021. While the ratio remains consistently above 1.0, indicating a continuous ability to meet short-term obligations without relying on the sale of inventory, the margin of safety has contracted from a peak of 1.83 in 2018 to 1.34 by the end of 2021.
- Quick Ratio Trends
- A peak in liquidity was observed in 2018 with a ratio of 1.83. A subsequent decline occurred in 2019 and 2020, where the ratio fell to 1.43 and 1.32, respectively. The period concluded with a slight stabilization in 2021 at 1.34.
- Quick Asset Fluctuations
- Total quick assets remained relatively stable between 2017 and 2018, followed by a peak of US$ 6,946,600 thousand in 2019. A significant reduction was recorded in 2020, with assets dropping to US$ 4,937,400 thousand, before recovering to US$ 5,764,200 thousand in 2021.
- Current Liabilities Influence
- The most pronounced decrease in the quick ratio occurred in 2019, primarily driven by a substantial increase in current liabilities, which rose to US$ 4,863,800 thousand from US$ 3,295,200 thousand in the preceding year. Although liabilities decreased in 2020, the simultaneous reduction in quick assets maintained the liquidity ratio at its lowest point in the analyzed period.
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Cash Ratio
Biogen Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 2,261,400) | 1,331,200) | 2,913,700) | 1,224,600) | 1,573,800) | |
| Marketable securities | 1,541,100) | 1,278,900) | 1,562,200) | 2,313,400) | 2,115,200) | |
| Total cash assets | 3,802,500) | 2,610,100) | 4,475,900) | 3,538,000) | 3,689,000) | |
| Current liabilities | 4,298,200) | 3,742,200) | 4,863,800) | 3,295,200) | 3,368,200) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.88 | 0.70 | 0.92 | 1.07 | 1.10 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| AbbVie Inc. | 0.28 | — | — | — | — | |
| Amgen Inc. | 0.66 | — | — | — | — | |
| Bristol-Myers Squibb Co. | 0.78 | — | — | — | — | |
| Danaher Corp. | 0.32 | — | — | — | — | |
| Eli Lilly & Co. | 0.25 | — | — | — | — | |
| Gilead Sciences Inc. | 0.56 | — | — | — | — | |
| Johnson & Johnson | 0.70 | — | — | — | — | |
| Merck & Co. Inc. | 0.34 | — | — | — | — | |
| Pfizer Inc. | 0.73 | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 1.45 | — | — | — | — | |
| Thermo Fisher Scientific Inc. | 0.33 | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | 3.51 | — | — | — | — | |
| Cash Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 0.58 | — | — | — | — | |
| Cash Ratio, Industry | ||||||
| Health Care | 0.60 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 3,802,500 ÷ 4,298,200 = 0.88
2 Click competitor name to see calculations.
The cash ratio exhibits a general downward trajectory from 2017 through 2020, followed by a partial recovery in 2021. Between 2017 and 2018, the ratio remained above 1.0, indicating that cash assets were sufficient to cover all current liabilities immediately. However, a shift occurred in 2019 as the ratio fell below this threshold, continuing to decline until reaching a five-year low in 2020.
- Cash Ratio Volatility
- A consistent decline is observed from a peak of 1.10 in 2017 to a minimum of 0.70 in 2020. This trend reflects a reduction in immediate liquidity availability relative to short-term obligations. The subsequent increase to 0.88 in 2021 suggests a correction in the liquidity position, although the ratio has not yet returned to the levels maintained during the 2017-2018 period.
- Cash Assets Dynamics
- Total cash assets experienced significant fluctuations. After reaching a peak of US$ 4,475,900 thousand in 2019, reserves decreased sharply to US$ 2,610,100 thousand in 2020. A recovery followed in 2021, with cash assets increasing to US$ 3,802,500 thousand, returning to a level comparable to that observed in 2017.
- Current Liabilities Trends
- Current liabilities demonstrated an overall upward trend, peaking at US$ 4,863,800 thousand in 2019. Despite a temporary decrease to US$ 3,742,200 thousand in 2020, liabilities rose again to US$ 4,298,200 thousand by the end of 2021. The expansion of current liabilities, particularly in 2019 and 2021, served as a primary driver in the compression of the cash ratio.
- Liquidity Correlation
- The most significant impact on liquidity occurred in 2020, where a simultaneous decrease in cash assets and a high baseline of liabilities resulted in the lowest cash ratio of 0.70. The 2021 improvement was driven by cash asset growth outpacing the increase in current liabilities, thereby improving the organization's immediate solvency posture.
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