Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
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Liquidity Ratios (Summary)
Allergan PLC, liquidity ratios
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Current ratio | ||||||
| Quick ratio | ||||||
| Cash ratio |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
- Current Ratio
- The current ratio exhibited notable fluctuation over the observed period. It increased significantly from 1.03 in 2015 to a peak of 2.27 in 2016, indicating a strong improvement in short-term liquidity during that year. However, after 2016, the ratio declined steadily to 1.16 in 2017, then slightly decreased further to 1.13 in 2018, and finally returned close to its initial level by 2019 at 1.01. This suggests a gradual reduction in the company's ability to cover current liabilities with current assets in the latter years.
- Quick Ratio
- The quick ratio followed a somewhat similar pattern to the current ratio but showed greater sensitivity to changes. Starting at a low 0.42 in 2015, the ratio surged dramatically to 2.00 in 2016, indicating a temporary strengthening of liquid assets excluding inventory. Subsequently, the quick ratio declined sharply to 0.95 in 2017 and continued to decrease modestly to 0.83 in 2018 and 0.82 in 2019. This downward trend points to a decrease in more readily accessible liquid assets relative to current liabilities after the peak in 2016.
- Cash Ratio
- The cash ratio demonstrated the most pronounced volatility among the liquidity measures. Beginning at a minimal 0.13 in 2015, it increased significantly to 1.68 in 2016, reflecting a substantial accumulation of cash and cash equivalents relative to current liabilities in that year. Following this peak, the ratio dropped sharply to 0.65 in 2017 and declined further to 0.33 in 2018. In 2019, there was a slight recovery to 0.53, yet it remained well below the 2016 level. This trend indicates a fluctuating but overall reduced reliance on cash reserves after the significant increase in 2016.
- Summary
- Overall, the data reveals a pronounced improvement in liquidity ratios in 2016, characterized by increased current, quick, and cash ratios, suggesting a temporary enhancement of liquidity and ability to meet short-term obligations. However, subsequent years exhibit a consistent downward adjustment across all ratios, returning to levels close to or slightly above those at the start of the period. This pattern may indicate changes in working capital management, inventory levels, or cash holdings impacting liquidity over time. The notable volatility, especially in the quick and cash ratios, underscores shifts in liquid assets composition within the company's current assets portfolio.
Current Ratio
Allergan PLC, current ratio calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Current ratio1 | ||||||
| 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: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- The current assets exhibited significant volatility over the period analyzed. Beginning at approximately 8.62 billion US dollars at the end of 2015, current assets surged to a peak of around 17.86 billion US dollars by the end of 2016. This was followed by a notable decline to approximately 11.38 billion in 2017 and a further decrease to about 6.48 billion in 2018. There was a recovery in 2019, with current assets increasing to roughly 11.13 billion. Overall, the trend indicates fluctuations with a substantial peak in 2016 and a partial rebound after a trough in 2018.
- Current Liabilities
- Current liabilities showed a fluctuating pattern with a generally moderate range. In 2015, liabilities stood at about 8.33 billion US dollars, slightly declining to approximately 7.87 billion in 2016. However, they increased again in 2017 to nearly 9.85 billion before sharply falling to around 5.73 billion in 2018. In 2019, current liabilities rose sharply to approximately 11.07 billion, which is the highest level across the analyzed timeframe. This indicates an increase in obligations at year-end 2019 compared to prior years, reflecting a growing short-term liability position.
- Current Ratio
- The current ratio demonstrated considerable variation throughout the period. It started at a marginally above-par level of 1.03 at the end of 2015, which indicates a balanced liquidity position. The ratio then more than doubled to 2.27 in 2016, suggesting a strong liquidity buffer that year. However, this was followed by a decline to 1.16 in 2017 and a further slight decrease to 1.13 in 2018, reflecting a weakening in short-term liquidity. By 2019, the current ratio declined to just above 1 (1.01), indicating a tight liquidity position with current assets barely sufficient to cover current liabilities. The overall trend suggests an initial liquidity strength in 2016 followed by a progressive erosion in subsequent years.
- Summary of Trends
- The data reveals a pattern of volatility in the company's short-term financial position over the period. There was a peak in current assets and liquidity in 2016, followed by a decline in both assets and liquidity ratios through 2017 and 2018. Despite some recovery in current assets in 2019, the increase in current liabilities outpaced the asset growth, resulting in a current ratio close to unity, signaling reduced liquidity strength. These fluctuations may indicate changing operational or financial strategies, possible impacts from external factors, or asset-liability management decisions affecting short-term financial stability.
Quick Ratio
Allergan PLC, quick ratio calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | ||||||
| Marketable securities | ||||||
| Accounts receivable, net | ||||||
| Total quick assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Quick ratio1 | ||||||
| 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: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets experienced significant fluctuations over the period analyzed. Starting at 3,506,900 thousand US dollars in 2015, the figure increased dramatically to 15,756,500 thousand in 2016. This was followed by a notable decline to 9,348,300 thousand in 2017, further dropping to 4,775,400 thousand in 2018. The value then rose again to 9,107,200 thousand in 2019. These movements indicate a volatile management of liquid assets within the timeframe.
- Current liabilities
- Current liabilities showed variable trends, initially decreasing from 8,328,300 thousand US dollars in 2015 to 7,874,700 thousand in 2016. Subsequently, there was a considerable increase to 9,848,100 thousand in 2017, followed by a substantial reduction to 5,727,900 thousand in 2018. In 2019, current liabilities again rose sharply to 11,070,700 thousand. The fluctuations suggest changing short-term obligations and possible shifts in operational or financing activities.
- Quick ratio
- The quick ratio, measuring the ability to meet short-term liabilities with quick assets, exhibited notable variability. It started at a low level of 0.42 in 2015, increased sharply to 2.00 in 2016, indicating strong short-term liquidity. This ratio then declined to 0.95 in 2017, further decreased to 0.83 in 2018, and slightly dropped again to 0.82 in 2019. The peak in 2016 reflects a period of robust liquidity, while the subsequent decrease points to relatively tighter short-term financial conditions.
Cash Ratio
Allergan PLC, cash ratio calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | ||||||
| Marketable securities | ||||||
| Total cash assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Cash ratio1 | ||||||
| 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: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total cash assets
- The total cash assets displayed significant fluctuations over the five-year period. The amount rose sharply from approximately 1.1 billion in 2015 to a peak of around 13.2 billion in 2016. Following this peak, there was a marked decline to about 6.4 billion in 2017, then a further decrease to approximately 1.9 billion in 2018. In 2019, total cash assets rebounded to 5.9 billion, indicating some recovery but still considerably below the 2016 level.
- Current liabilities
- Current liabilities showed variability but without a clear directional trend. There was a slight decrease from roughly 8.3 billion in 2015 to 7.9 billion in 2016, followed by an increase to nearly 9.8 billion in 2017. A significant reduction was observed in 2018 to approximately 5.7 billion, but this figure rose sharply again to about 11.1 billion in 2019, the highest level in the recorded period.
- Cash ratio
- The cash ratio, measuring liquidity, exhibited considerable volatility. It started at a low level of 0.13 in 2015, surged to 1.68 in 2016, indicating a strong liquidity position at that point. Subsequently, the ratio declined to 0.65 in 2017, then decreased further to 0.33 in 2018, reflecting diminished liquidity. In 2019, the ratio improved somewhat to 0.53 but remained below the peak of 2016, suggesting a moderate but unstable liquidity position overall.
- Summary Insights
- The data illustrate a period characterized by substantial volatility in both liquidity and cash asset levels. The peak in cash assets and cash ratio in 2016 suggests an exceptionally strong liquidity position that was not sustained in the following years. Fluctuations in current liabilities, especially the increase noted in 2019, may have contributed to the pressure on liquidity. The declining and then partially recovering cash ratio highlights challenges in maintaining liquidity stability. The overall trend indicates a need for cautious monitoring of the company's short-term financial health and working capital management.