Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
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Liquidity Ratios (Summary)
AbbVie Inc., liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Current ratio | ||||||
| Quick ratio | ||||||
| Cash ratio |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The analysis of liquidity ratios over the five-year period reveals notable fluctuations and a general downward trend in the company's short-term financial health.
- Current Ratio
- The current ratio exhibits variability, starting at 0.84 in 2020 and slightly declining to 0.79 in 2021, which indicates a marginal decrease in the company's ability to cover its current liabilities with current assets. This ratio then improves to 0.96 in 2022, suggesting enhanced liquidity during that year. However, it declines again to 0.87 in 2023 and further falls considerably to 0.66 in 2024. The final value points to a weakening position in covering short-term obligations, as a current ratio below 1 typically suggests potential liquidity constraints.
- Quick Ratio
- The quick ratio follows a similar pattern, beginning at 0.60 in 2020 and decreasing to 0.56 in 2021. It then rises to a peak of 0.69 in 2022, reflecting a stronger position in terms of liquid assets excluding inventories. This ratio decreases to 0.63 in 2023 and experiences a significant drop to 0.43 in 2024. The decline in the quick ratio below the 0.5 mark may indicate increased difficulty in meeting short-term liabilities without relying on inventory liquidation.
- Cash Ratio
- The cash ratio remains the lowest among the liquidity measures but shows some initial stability, starting at 0.30 in 2020 and slightly decreasing to 0.28 in 2021. It increases modestly to 0.31 in 2022 and 0.34 in 2023, reflecting a marginal improvement in the most liquid assets available to cover current liabilities. However, in 2024, this ratio drops sharply to 0.14, highlighting a significant reduction in cash and cash equivalents relative to current liabilities. This decline underscores increased vulnerability in the company's immediate liquidity position.
Overall, the company demonstrates fluctuating liquidity ratios with an improvement peak in 2022 across all three metrics, followed by a marked decline through 2024. The downward trend, particularly in the last year, suggests increasing challenges in meeting short-term financial obligations with available assets, warranting further attention to working capital management and cash reserves.
Current Ratio
AbbVie Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Current ratio1 | ||||||
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
| Current Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| Current Ratio, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals notable fluctuations in the company's liquidity over the five-year period under review. There is an observed increase in current assets from US$24,173 million in 2020, peaking at US$33,002 million in 2023, before falling to US$25,582 million in 2024. Concurrently, current liabilities have exhibited an overall upward trend, rising from US$28,661 million in 2020 to US$38,749 million in 2024, with a slight dip noted in 2022.
The current ratio, a critical indicator of short-term liquidity, has demonstrated a declining pattern. Starting at 0.84 in 2020, it decreased to 0.79 in 2021, improved somewhat to 0.96 in 2022, before dropping again to 0.87 in 2023 and reaching its lowest point of 0.66 in 2024. This trend suggests increasing pressure on the company's ability to cover short-term obligations with its current assets.
- Current Assets
- Exhibited growth from 2020 to 2023 with a peak in 2023, followed by a significant decline in 2024, indicating potential changes in asset management or liquidation of short-term assets.
- Current Liabilities
- Rose consistently over the period reviewed, reflecting either increased short-term borrowing or greater obligations, with a minor decrease noticed in 2022.
- Current Ratio
- Displayed volatility but trended downward overall, signaling deteriorating liquidity and possibly hinting at increased risk in meeting short-term liabilities as of 2024.
In summary, despite some temporary improvement in current ratio during 2022, the overall decline in liquidity metrics and increased liabilities suggest a tightening in the company's short-term financial position by the end of the most recent period analyzed.
Quick Ratio
AbbVie Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and equivalents | ||||||
| Short-term investments | ||||||
| Accounts receivable, net | ||||||
| Total quick assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Quick ratio1 | ||||||
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
| Quick Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| Quick Ratio, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the analyzed periods:
- Total Quick Assets
- The value of total quick assets increased steadily from US$17,301 million in 2020 to US$23,971 million in 2023, representing a growth trend over these four years. However, in 2024, there is a significant decline to US$16,474 million, indicating a reversal in the accumulation of quick assets.
- Current Liabilities
- Current liabilities showed a general upward trajectory from US$28,661 million in 2020 to US$38,749 million in 2024. There was a peak in 2021 at US$35,194 million, a drop in 2022 to US$29,538 million, followed by a sharp increase in 2023 and 2024. This suggests fluctuating short-term obligations with a recent tendency towards higher liabilities.
- Quick Ratio
- The quick ratio, an indicator of short-term liquidity, started at 0.6 in 2020, slightly decreased to 0.56 in 2021, then improved to 0.69 in 2022. However, it dipped again to 0.63 in 2023 and further declined significantly to 0.43 in 2024. This trend indicates worsening liquidity, with the company becoming less capable of covering its current liabilities with its most liquid assets in the most recent year.
Overall, there is an observable pattern where liquid assets initially grew but fell sharply in 2024, while current liabilities have generally increased over the period. The declining quick ratio towards 2024 points to increasing liquidity risk, suggesting the company's immediate financial stability may be under pressure despite previous years of growth in quick assets.
Cash Ratio
AbbVie Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and equivalents | ||||||
| Short-term investments | ||||||
| Total cash assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Cash ratio1 | ||||||
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
| Cash Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| Cash Ratio, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The financial data over the five-year period reveals several noteworthy trends related to liquidity and the management of current liabilities.
- Total Cash Assets
- Total cash assets experienced fluctuations, beginning at 8,479 million US dollars in 2020, increasing to a peak of 12,816 million US dollars in 2023, before significantly declining to 5,555 million US dollars in 2024. This suggests a period of accumulation followed by a marked reduction in readily available cash.
- Current Liabilities
- Current liabilities showed a consistent upward trend over the period, rising from 28,661 million US dollars in 2020 to 38,749 million US dollars in 2024. This indicates increasing short-term obligations and potential pressure on liquidity management.
- Cash Ratio
- The cash ratio, which measures the ability to cover current liabilities with cash and cash equivalents, started at 0.3 in 2020. It remained relatively stable between 0.28 and 0.34 from 2021 to 2023, reflecting a moderate liquidity position despite rising liabilities. However, in 2024, the ratio dropped sharply to 0.14, signaling a reduced capacity to meet short-term obligations using cash alone.
Overall, the analysis highlights a growing liability burden paired with volatile cash levels, culminating in a significantly weakened liquidity position by the end of 2024. This pattern may require attention to improve cash reserves or optimize liability management moving forward.