Gilead Sciences Inc. (NASDAQ:GILD)

Current Ratio

The current ratio shows notable fluctuations throughout the observed periods, starting at a high of 3.04 and experiencing a sharp decline to 1.4 by the end of 2020. Thereafter, it stabilizes around the 1.3 to 1.4 range during 2021 and most of 2022. In 2023, the ratio dips further to around 1.02 but gradually recovers to peak at 1.6 by the first quarter of 2025 before slightly declining to approximately 1.32. Overall, while the ratio remains above 1, indicating adequate short-term liquidity, the downward shifts in 2020 and the early 2023 period suggest increased pressure on liquidity at these times.

Quick Ratio

The quick ratio follows a trend broadly similar to the current ratio but at lower values, reflecting the exclusion of inventory from current assets. Initially, it starts at 2.78 and undergoes a consistent decline to a low of 0.78 in mid-2023. Despite some recovery in late 2023 and early 2024, the ratio dips again below 1 during mid-2024 but then rises sharply to 1.2 by March 2025 before a slight fall to 0.89. The frequent dips below the threshold of 1 during several periods indicate moments of tighter liquidity when liquid assets may not be sufficient to cover current liabilities promptly.

Cash Ratio

The cash ratio shows a declining trend over the entire timeframe, beginning at a healthy 2.34 and falling substantially to around 0.65 by the end of 2020. It remains below 1 throughout the subsequent periods, fluctuating between 0.36 and 0.64 during most quarters. Notably, there is a pronounced dip to 0.26 in late 2024, indicating relatively low cash and cash equivalents relative to current liabilities at that time. The final reported quarters show a slight improvement up to 0.83, then a moderate decrease again. This trend points to a constrained ability to cover short-term obligations with cash alone, suggesting reliance on converting other assets or external financing.

Current Assets

The current assets exhibit fluctuations through the observed periods. Starting at a moderately high value, they peaked notably at the end of September 2020 before declining sharply in the fourth quarter of 2020. Throughout 2021, current assets stabilized within a moderate range but showed a declining trend by the first half of 2022. From mid-2022 to early 2023, there was a modest recovery and growth, reaching the highest levels in the last quarter of 2023. However, a decrease ensued in early and mid-2024, followed by an uptick in the third quarter of 2024 and a tapering off towards mid-2025. Overall, the asset base experienced considerable volatility with intermittent recoveries after downturns.

Current Liabilities

Current liabilities demonstrated a somewhat irregular pattern with multiple shifts. After beginning at a moderate level, they increased in mid-2020, peaking at the end of that year, and then declined by early 2021. The following quarterly data through 2021 and 2022 reveal swings between reductions and increases without a clear long-term trend. Notably, a significant rise in liabilities occurred in the second quarter of 2023, followed by a decrease towards the end of the same year and fluctuations in early 2024. The liabilities generally maintained a range slightly below or above 10,000 million US dollars, with the highest values recorded in 2023 and early 2024, indicating periods of heightened obligations.

Current Ratio

The current ratio shows marked variability reflecting changes in liquidity and short-term financial strength. The ratio started highly favorable in early 2020, with a value exceeding 3, indicative of strong liquidity. It then dropped sharply to a low in the last quarter of 2020, moving to a range around 1.3 in 2021 with minor fluctuations. A further decline is evident in mid-2023 reaching nearly 1.0, signaling diminished liquidity, before recovering somewhat by the last quarter of 2023 and again dropping in early to mid-2024. The subsequent quarters show a positive trend with ratios moving upwards toward 1.6 before a slight decline near mid-2025. Overall, liquidity weakened significantly after early 2020 but showed persistent attempts at stabilization and recovery, though it remained at modest levels relative to the start of the period.

Overall Insights

The analysis reveals a correlation between movements in current assets and liabilities, influencing the current ratio and thus the company’s liquidity profile. The volatility in current assets and liabilities suggests active management of working capital, impacted by possibly operational demands or financing activities during the period. The general decline in the current ratio after early 2020 points to tighter liquidity, which may warrant further monitoring. Periods of recovery in the current ratio indicate responsive adjustments, but the overall trend emphasizes the importance of sustaining a balance to safeguard short-term financial health.

Total Quick Assets

The total quick assets exhibit notable fluctuations over the periods analyzed. Starting at a high of approximately $24.7 billion in March 2020, there is a significant decline to $12.3 billion by December 2020. Subsequently, the assets show a modest recovery and fluctuation around the $9 to $11 billion range from early 2021 through late 2023. However, from early 2024 onwards, there is a sharper variability observed, with a marked dip to around $7.4 billion in June 2024 followed by a rise to approximately $14.4 billion at the end of 2024, before stabilizing slightly below $10 billion by mid-2025.

Current Liabilities

Current liabilities show an overall increasing trend from $8.9 billion in March 2020 to a peak of about $13 billion in March 2024. There are some fluctuations, such as a dip in the early quarters of 2022 and again towards mid-2023, but generally, liabilities increase steadily until early 2024. After peaking, the liabilities slightly decrease but remain elevated, hovering between $11 billion and $12.3 billion through mid-2025.

Quick Ratio

The quick ratio demonstrates considerable variability and a downward trend in certain intervals. It starts strong at 2.78 in March 2020, plummeting to near parity (1.08) by December 2020. Post-2020, the ratio fluctuates close to 1.0, indicating a balance between liquid assets and short-term liabilities. Notably, there is a decline below 1.0 in multiple quarters, reaching lows around 0.69 to 0.72 in mid-2024, signaling potential liquidity stress. However, the ratio improves again to 1.2 by December 2024 before declining slightly to 0.89 by June 2025. Overall, the quick ratio reveals periods of liquidity tightening interspersed with brief recoveries.

The financial data reveals several notable trends across the reporting periods from March 31, 2020, to June 30, 2025. Analyzing total cash assets, current liabilities, and the cash ratio provides insights into liquidity and short-term financial management.

Total Cash Assets

Total cash assets exhibit significant fluctuations over the period. Initially, cash reserves were robust, peaking at $23,975 million in September 2020, followed by a sharp decline to $5,666 million by March 31, 2021. Subsequently, cash levels showed moderate variability, generally remaining between approximately $5,000 million and $7,200 million until December 31, 2023. Another notable decline occurs starting in March 2024, with cash assets dropping to $2,772 million in June 2024 before rebounding to $9,991 million by December 31, 2024. The data suggests periods of cash utilization and replenishment, indicating active cash management possibly related to operational needs or investment activities.

Current Liabilities

Current liabilities demonstrated an overall upward trend with short-term volatility. Starting at $8,879 million in March 2020, liabilities increased, reaching $11,610 million by December 2021. The following years showed elevated levels with peaks such as $13,015 million in March 2024 and consistently high figures around $11,000 million to $12,000 million toward mid-2025. This progression implies rising short-term obligations, which could derive from increased operational costs, credit usage, or other liabilities maturing within one year.

Cash Ratio

The cash ratio, representing liquidity by comparing cash assets to current liabilities, reflects a declining trend overall. It began at a strong 2.34 in March 2020, indicating more than double coverage of current liabilities by cash assets at that time. However, by the end of 2020, the ratio plummeted to 0.65 and continued maneuvering mostly below 1.0, fluctuating between roughly 0.26 and 0.83 from 2022 onwards. The lowest point was 0.26 in June 2024, signifying cash assets were only about a quarter of current liabilities at that time. This decline points to a deterioration in liquidity, suggesting the company holds proportionately less cash against its immediate obligations than in earlier periods.

In summary, the company experienced a notable reduction in cash reserves following mid-2020, coupled with an increase in current liabilities and a corresponding decline in the cash ratio. These patterns indicate tighter liquidity conditions over time, with potential implications for short-term financial flexibility. The fluctuations in cash assets show responsiveness to operational or strategic changes, but the downward trend in liquidity measures warrants attention to the management of working capital and short-term obligations.