Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Allergan Inc., liquidity ratios
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Current ratio | 4.41 | 4.28 | 4.07 | 4.24 | 2.61 | |
| Quick ratio | 3.78 | 3.64 | 3.40 | 3.47 | 2.22 | |
| Cash ratio | 3.19 | 2.93 | 2.70 | 2.71 | 1.79 |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
Over the period from 2010 to 2014, the current ratio exhibits an overall upward trend. Starting at 2.61 in 2010, it rises significantly to 4.24 in 2011, followed by a slight decrease to 4.07 in 2012. Subsequently, the ratio increases again to 4.28 in 2013 and further to 4.41 in 2014. This indicates a strengthening ability to cover short-term liabilities with current assets over the five-year span.
The quick ratio follows a similar pattern, with a notable increase from 2.22 in 2010 to 3.47 in 2011. It then experiences a marginal decline to 3.4 in 2012 but continues its upward trend thereafter, reaching 3.64 in 2013 and 3.78 in 2014. This suggests an improvement in liquidity when inventory is excluded, reflecting a solid quick asset base relative to current liabilities.
The cash ratio also demonstrates consistent growth throughout the timeframe. Beginning at 1.79 in 2010, it climbs to 2.71 in 2011 and slightly decreases to 2.7 in 2012. After 2012, the ratio increases consecutively to 2.93 in 2013 and 3.19 in 2014. This trend points to an increasing proportion of cash and cash equivalents relative to current liabilities, indicating enhanced liquidity and operational cash availability.
Overall, the progression of these key liquidity ratios reflects an improving liquidity position. The company appears to have steadily increased its ability to meet short-term obligations through growth in current assets, quick assets, and cash holdings over the analyzed period.
Current Ratio
Allergan Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 6,871,200) | 5,319,700) | 4,458,800) | 4,048,300) | 3,993,700) | |
| Current liabilities | 1,557,300) | 1,244,300) | 1,095,200) | 955,000) | 1,528,400) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 4.41 | 4.28 | 4.07 | 4.24 | 2.61 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| 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. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
Current ratio = Current assets ÷ Current liabilities
= 6,871,200 ÷ 1,557,300 = 4.41
2 Click competitor name to see calculations.
- Current Assets
- The current assets show a consistent upward trend over the five-year period. Beginning at approximately 3.99 billion US dollars at the end of 2010, the value increases steadily each year, reaching about 6.87 billion US dollars by the end of 2014. This indicates a strong growth in the company's liquid and short-term assets available over the period.
- Current Liabilities
- Current liabilities exhibit some fluctuations but generally show an increase from 1.53 billion US dollars in 2010 to approximately 1.56 billion US dollars in 2014. Notably, there is a dip in 2011 to 955 million US dollars, after which the liabilities gradually rise in subsequent years. This suggests variability in short-term obligations, with a general upward movement towards the end of the period.
- Current Ratio
- The current ratio demonstrates a significant improvement, starting at 2.61 in 2010 and increasing sharply to 4.24 in 2011. Although it slightly decreased to 4.07 in 2012, it rebounded and remained stable above 4.0 in the following years, reaching 4.41 in 2014. This reflects an enhanced liquidity position with the company increasingly able to cover its short-term liabilities with current assets.
Quick Ratio
Allergan Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and equivalents | 4,911,400) | 3,046,100) | 2,701,800) | 2,406,100) | 1,991,200) | |
| Short-term investments | 55,000) | 603,000) | 260,600) | 179,900) | 749,100) | |
| Trade receivables, net | 914,500) | 883,300) | 764,200) | 730,600) | 647,300) | |
| Total quick assets | 5,880,900) | 4,532,400) | 3,726,600) | 3,316,600) | 3,387,600) | |
| Current liabilities | 1,557,300) | 1,244,300) | 1,095,200) | 955,000) | 1,528,400) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 3.78 | 3.64 | 3.40 | 3.47 | 2.22 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| 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. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 5,880,900 ÷ 1,557,300 = 3.78
2 Click competitor name to see calculations.
- Total Quick Assets
- The total quick assets exhibited a consistent upward trend over the five-year period. Starting at approximately 3.39 billion USD in 2010, the value slightly decreased in 2011 but then steadily increased each subsequent year, reaching nearly 5.88 billion USD by the end of 2014. This growth indicates an enhancement in highly liquid assets available to the company within this timeframe.
- Current Liabilities
- Current liabilities showed a fluctuating pattern in the early years but trended upward overall. The amount fell from about 1.53 billion USD in 2010 to 955 million USD in 2011, which represents a notable decrease. Subsequently, liabilities rose gradually each year, reaching approximately 1.56 billion USD by 2014. Despite the initial drop, the rising liabilities in later years may suggest increased short-term financial obligations or growth in operational activities.
- Quick Ratio
- The quick ratio displayed a positive trend throughout the period, starting at 2.22 in 2010 and increasing to 3.78 by 2014. This ratio, which measures the company's ability to meet short-term liabilities with quick assets, improved steadily, reflecting enhanced liquidity and a stronger short-term financial position. The ratio remained above 2.0 for all years, indicating a robust liquidity margin relative to current liabilities.
Cash Ratio
Allergan Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and equivalents | 4,911,400) | 3,046,100) | 2,701,800) | 2,406,100) | 1,991,200) | |
| Short-term investments | 55,000) | 603,000) | 260,600) | 179,900) | 749,100) | |
| Total cash assets | 4,966,400) | 3,649,100) | 2,962,400) | 2,586,000) | 2,740,300) | |
| Current liabilities | 1,557,300) | 1,244,300) | 1,095,200) | 955,000) | 1,528,400) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 3.19 | 2.93 | 2.70 | 2.71 | 1.79 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| 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. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 4,966,400 ÷ 1,557,300 = 3.19
2 Click competitor name to see calculations.
The financial data shows notable trends in cash assets, current liabilities, and liquidity ratios over the five-year period ending in 2014.
- Total Cash Assets
-
There is a general upward trend in total cash assets from 2010 to 2014. Starting at approximately $2.74 billion in 2010, cash assets decreased slightly in 2011 to about $2.59 billion but then increased steadily each subsequent year, reaching nearly $4.97 billion by the end of 2014. This indicates a strengthening cash position overall, with a substantial increase of around 81% over the five-year period.
- Current Liabilities
-
Current liabilities show more variability. The level was high in 2010 at approximately $1.53 billion but dropped significantly to $955 million in 2011. After that, liabilities increased gradually each year, reaching about $1.56 billion by the end of 2014, which is slightly higher than the 2010 level. This pattern suggests an initial reduction in short-term obligations followed by a moderate buildup.
- Cash Ratio
-
The cash ratio, which measures liquidity by comparing cash assets to current liabilities, shows a consistent upward trend throughout the period. Beginning at 1.79 in 2010, it increased to 2.71 in 2011 and remained around 2.7 in 2012. After that, it grew steadily to 2.93 in 2013 and reached 3.19 in 2014. These values imply increasing liquidity, with cash assets more than tripling current liabilities by the end of the cycle, reflecting a conservative liquidity management approach.