AbbVie Inc. (NYSE:ABBV)

The financial ratios indicate the company’s short-term liquidity position over multiple quarters, revealing certain fluctuations and overall trends.

Current Ratio

The current ratio started at a relatively high level of 3.14 in March 2020 but declined sharply in subsequent quarters, reaching a low near 0.79 by December 2021. Following this period, the ratio exhibited some recovery, fluctuating mostly between 0.82 and 0.96 through 2023 and early 2024. However, from mid-2024 onward, the ratio declined again, hitting levels around 0.65 to 0.76, which could suggest reduced liquidity buffers or increased current liabilities relative to current assets in recent periods.

Quick Ratio

This ratio showed a notable decrease from 2.88 in March 2020 to a lower range between 0.56 and 0.75 from mid-2020 to late 2022. It then remained relatively stable with slight quarterly variations around 0.60 to 0.70 through 2023 and early 2024. However, there was a clear downward trend starting mid-2024, with the quick ratio reaching as low as 0.43 by mid-2025. This suggests a tightening in liquid assets excluding inventory relative to current liabilities, indicating potentially increased liquidity risk or operational cash constraints.

Cash Ratio

The cash ratio experienced the most dramatic decline, dropping from a high of 2.5 in March 2020 to values generally below 0.5 in all subsequent periods. The ratio hovered mostly between 0.23 and 0.44 from 2021 through early 2024, indicating less immediate cash availability relative to current liabilities compared to early 2020. Toward the latter periods of the data, especially from mid-2024 onwards, the cash ratio declined further to levels near 0.14 to 0.16, which signals a significant reduction in cash reserves on hand relative to short-term obligations.

Overall, the liquidity ratios demonstrate a contraction in short-term financial resilience since early 2020. The initial high liquidity measures have normalized and, in recent quarters, have fallen towards more conservative levels. This may reflect strategic shifts in balance sheet management, changes in working capital components, or altered market or operational conditions impacting cash and liquidity management. The consistent downward trends, particularly in the cash and quick ratios in the most recent periods, warrant attention for potential liquidity risk and its implications on operational flexibility.

The analysis of the quarterly financial data reveals notable fluctuations and trends in the company's liquidity position over the examined periods.

Current Assets

The current assets show significant variability from quarter to quarter. Initially, there is a marked drop from 51,758 million US dollars at the beginning (Mar 31, 2020) to around 21,256 million by mid-2020 (Jun 30, 2020). Following this decline, current assets generally maintain a level between approximately 25,000 and 33,000 million dollars through the subsequent quarters. From the end of 2023 into 2024, an upward trend is observed with current assets rising to nearly 38,871 million US dollars (Sep 30, 2024), showing improved asset levels before experiencing another decline to about 27,675 million by early 2025.

Current Liabilities

Current liabilities start at 16,471 million US dollars (Mar 31, 2020) and increase sharply to a peak of 35,194 million by the end of 2021 (Dec 31, 2021). This growth suggests a rising short-term obligation burden. Following this peak, current liabilities remain elevated, generally fluctuating between 29,000 and 42,000 million through to mid-2025. The highest observed liability is 43,062 million as of Dec 31, 2024, indicating a continual increase in short-term financing or payables.

Current Ratio

The current ratio, a key indicator of short-term liquidity, begins at a strong level of 3.14 on Mar 31, 2020, coinciding with the initially high current assets and relatively low liabilities. However, the ratio subsequently declines precipitously, falling below 1.0 from Jun 30, 2020 onward, indicating that current liabilities exceed current assets in most quarters. Throughout the observed period, the ratio remains mostly below or around 1.0, fluctuating between approximately 0.65 and 0.96. Notably, the ratio dips to its lowest point of about 0.65 in Sep 30, 2024, demonstrating a weakened liquidity position at that time. The consistent sub-1.0 ratio over multiple quarters suggests persistent short-term liquidity challenges.

In summary, the company's liquidity profile exhibits a declining trend from an initially strong position to a situation where current liabilities generally surpass current assets. Despite some interim improvements in current assets, the rising current liabilities contribute to the sustained low current ratios, signaling ongoing pressure on the company’s ability to cover short-term obligations comfortably. These patterns emphasize the importance of monitoring working capital management and potential liquidity risks in future periods.

Total quick assets

The total quick assets exhibit significant fluctuations over the periods analyzed. A steep decline is observed from March 31, 2020 (47,504 million USD) to June 30, 2020 (14,394 million USD), followed by a gradual recovery through 2020 and 2021, peaking intermittently around September 30, 2021 (21,530 million USD). Afterward, the amounts generally fluctuate in the range of approximately 18,000 to 24,000 million USD through 2022 and 2023, with notable peaks around September 30, 2023 (24,702 million USD) and March 31, 2024 (30,018 million USD). The trend in late 2024 and early 2025 shows a decline, with values descending to around 17,653 to 19,104 million USD, indicating less liquidity compared to earlier peaks.

Current liabilities

Current liabilities demonstrate a rising trend over the majority of the periods. Beginning at 16,471 million USD on March 31, 2020, liabilities sharply increase to a peak of approximately 35,194 million USD by December 31, 2021. Subsequently, current liabilities maintain elevated levels with some volatility, including a peak on December 31, 2023 (37,841 million USD), and increasing further to 43,062 million USD by December 31, 2024. A moderate decline follows into mid-2025, ending near 39,767 million USD on June 30, 2025. Overall, this reflects a considerable increase in short-term obligations over the observed timeline.

Quick ratio

The quick ratio shows a marked decline at the outset, from 2.88 at March 31, 2020, to a low range between 0.56 and 0.69 across subsequent quarters. Throughout 2020 and 2021, this ratio remains generally under 1, indicating quick assets are less than current liabilities, signifying tighter liquidity conditions. Periodic fluctuations occur, with the highest recent level at 0.72 on March 31, 2024, but the overall trend continues downward moving into 2024 and 2025, falling below 0.5 by late 2024 and mid-2025. This sustained level under 1 suggests ongoing challenges in meeting short-term obligations promptly through liquid assets.

Summary

Overall, the data reveals a significant reduction in liquidity from early 2020, followed by partial recoveries that are not sustained long term. The steady increase in current liabilities combined with only moderate gains or declines in quick assets results in a consistently depressed quick ratio throughout most of the periods. The company's immediate liquidity position appears increasingly constrained over time, evidenced by quick ratios consistently below 1 and trending downward toward 0.5 in recent quarters. This pattern points to elevated short-term financial obligations relative to liquid assets, warranting careful monitoring and potential liquidity management strategies.

Total Cash Assets

The total cash assets exhibit a highly volatile pattern over the observed periods, with significant fluctuations quarter to quarter. Starting at a high of 41,142 million US dollars in March 2020, there is a sharp decline to as low as 5,555 million in June 2025. Intermittent recoveries are evident, particularly notable spikes in September 2021 (12,249 million) and March 2024 (18,069 million). However, the overall trend appears to be downward after early 2023, indicating a reduction in liquidity reserves.

Current Liabilities

Current liabilities have generally increased over time, indicating a rise in short-term obligations. From 16,471 million in March 2020, liabilities escalated with some fluctuations to a peak of 43,062 million in March 2025 before slightly decreasing to 39,767 million in June 2025. This upward trajectory reflects growing financial commitments, possibly related to expanded operations or increased borrowing.

Cash Ratio

The cash ratio, which measures the company’s ability to cover current liabilities with cash assets, has trended downward over the period. Initially very strong at 2.5 in March 2020, it quickly dropped and fluctuated around low values mostly between 0.14 and 0.44 in subsequent periods. The lowest ratios occur towards the end of the timeline, with values around 0.14-0.16 from March 2025 to June 2025, signaling decreased liquidity coverage relative to current liabilities and potentially higher short-term financial risk.