Allergan PLC (NYSE:AGN)

Current Ratio Trend

The current ratio exhibits notable fluctuations over the observed periods. Initially, it declined from 1.44 in March 2015 to a low of 0.99 in June 2016, implying a weakening in short-term liquidity. A sharp spike is evident in September 2016, reaching 3.95, followed by a decrease to values around 1.1 to 1.16 during 2017 and early 2018. Subsequently, it showed a steady decline to 0.71 in March 2019, indicating a potential drop in the ability to cover current liabilities with current assets. By the end of the period in March 2020, the ratio stabilized at 1.01, reflecting relatively balanced short-term financial health.

Quick Ratio Trend

The quick ratio demonstrates similar volatility as the current ratio but generally maintains lower values, reflecting less liquidity when inventory is excluded. It began at 0.80 in March 2015 and reached its lowest dynamic at 0.34 in June 2016 before an exceptional surge to 3.71 in September 2016. Afterward, it declined steadily through 2017 and 2018, hitting a low of 0.65 in September 2018. Following a modest recovery to 0.83 in December 2018, it fluctuated slightly and ended at 0.73 in March 2020. This pattern suggests intermittent liquidity management challenges and fluctuating availability of liquid assets.

Cash Ratio Trend

The cash ratio indicates the company's most conservative liquidity position, focusing solely on cash and cash equivalents. The ratio started at 0.28 in March 2015 and decreased to 0.06 by June 2016, showing a reduction in immediate liquid assets. A pronounced peak to 3.41 in September 2016 aligns with the spikes seen in other ratios. This was followed by a decline stabilizing between 0.19 and 0.35 during most of 2017 to early 2019. In the final quarters, the cash ratio increased to 0.53 in December 2019 but slightly declined to 0.35 in March 2020. This suggests variable but generally limited cash reserves relative to current liabilities, with brief periods of substantial liquidity.

Overall Liquidity Insights

The observed data reveals significant volatility across all liquidity ratios, with an unusual peak in the third quarter of 2016 that may indicate an extraordinary event or adjustment in working capital management. The subsequent periods show a trend towards more normalized liquidity ratios but with a general tendency towards lower values compared to the early periods. This could suggest tighter liquidity management or possible pressures on current assets and cash holdings. By March 2020, the ratios stabilized near or slightly above 1.0 for the current ratio and below 1.0 for both the quick and cash ratios, implying cautious liquidity positioning with moderate ability to meet short-term obligations.

Current Assets

The current assets exhibit significant volatility throughout the periods analyzed. Initially, there is a high value of 11,017,200 thousand US dollars at March 31, 2015, which drops to 8,615,400 thousand by December 31, 2015. A marked increase occurs at September 30, 2016, reaching 31,723,900 thousand US dollars, followed by a decline to figures ranging mainly between 5,740,200 and 11,126,700 thousand US dollars in subsequent quarters. Towards the final quarter (March 31, 2020), the current assets stand at 7,474,100 thousand, indicating a general decrease compared to the early periods.

Current Liabilities

Current liabilities fluctuate within a narrower range compared to current assets. The values start at 7,655,500 thousand US dollars at March 31, 2015 and maintain a general pattern between approximately 5,816,000 and 11,070,700 thousand US dollars. Notable points include a peak of 10,395,600 thousand US dollars at March 31, 2017 and the highest recorded figure of 11,070,700 thousand at December 31, 2019. The liabilities decrease to 7,433,400 thousand at the last available date, a level close to the initial values.

Current Ratio

The current ratio demonstrates variability across the periods, reflecting the fluctuations in both current assets and liabilities. The ratio starts above 1.4 in early 2015, indicating a relatively strong liquidity position at that time. It decreases to near 1.0 or below in early 2016, before experiencing a significant surge to 3.95 at September 30, 2016, suggesting an exceptionally favorable short-term liquidity during that quarter. Following this peak, the ratio declines and stabilizes around 1.0, oscillating slightly above or below this benchmark. The lowest recorded ratio is 0.71 at March 31, 2019, implying potential short-term liquidity stress. The final reported ratio of 1.01 at March 31, 2020 indicates marginally adequate liquidity.

Overall Analysis

The data reveal a pattern of volatility in current assets with some significant spikes, contrasted with more stable current liabilities. The resulting current ratio trajectory highlights moments of both strong liquidity and potential strain. The exceptional rise in current ratio observed in late 2016 corresponds to a sharp increase in current assets without a similar increase in liabilities. In more recent periods, the current ratio hovers near or slightly below 1.0, indicating a situation where current assets are just sufficient or marginally insufficient to cover current liabilities. This warrants attention to liquidity management, as minor changes could impact short-term financial stability.

The company's total quick assets exhibit significant fluctuations over the analyzed periods. Initially, these assets decrease steadily from 6,123,700 thousand US dollars in March 2015 to a low of 2,997,100 thousand US dollars in June 2016. This is followed by a sharp increase, peaking at 29,790,800 thousand US dollars in September 2016, before declining once again to values ranging between approximately 4,000,000 to 9,000,000 thousand US dollars in the subsequent quarters. Towards the end of the period, there is a moderate rise reaching 9,107,200 thousand US dollars in December 2019, followed by a decrease to 5,418,900 thousand US dollars in March 2020.

Current liabilities show a somewhat erratic pattern but generally fluctuate around the 7,000,000 to 11,000,000 thousand US dollars range. Starting at 7,655,500 thousand US dollars in March 2015, liabilities rise to a peak of 10,195,500 thousand US dollars in March 2016, then decline slightly before spiking again to 10,391,600 thousand US dollars in March 2017. A downward trend is observed through 2018, with a low of 5,816,000 thousand US dollars in March 2018, followed by intermittent increases and decreases, culminating in 7,433,400 thousand US dollars in March 2020.

The quick ratio mirrors the variations in quick assets and current liabilities, exhibiting a volatile trend. Starting below 1.0 at 0.8 in March 2015, it declines to a low point of 0.34 in June 2016, indicating lower liquidity. A dramatic spike occurs in September 2016 to 3.71, suggesting exceptionally high liquidity during that quarter, followed by a decline to near parity levels around 1.0 in 2017. In the subsequent years, the ratio fluctuates mostly between 0.5 and 0.8, indicating moderate liquidity but generally below the ideal benchmark of 1.0. The ratio settles at 0.73 in March 2020, implying a cautious liquidity position.

Overall, the data indicate periods of material shifts in both assets and liabilities affecting liquidity. The pronounced spike in quick assets and the quick ratio in late 2016 is an outlier amidst otherwise more stable but moderate levels. The company's ability to maintain quick assets in relation to its current liabilities appears inconsistent, suggesting potential liquidity management challenges over the analyzed timeframe.

The financial data over the periods from March 31, 2015, through March 31, 2020, reveal notable volatility and trends in liquidity and current liabilities.

Total Cash Assets

Total cash assets fluctuate substantially over the observed quarters. Initial values start around 2.13 billion USD in March 2015, dipping notably in mid-2016 to approximately 506.6 million USD. There is a significant surge in September 2016, where cash assets peak sharply at roughly 27.39 billion USD, followed by another peak in December 2016 at about 13.23 billion USD. Subsequently, cash assets mostly trend downward with minor rises, stabilizing at a lower range around 1.2 to 2.0 billion USD from early 2018 onward, except for high volatility seen in late 2019 where assets jump to above 4.5 billion and near 5.9 billion USD before declining again.

Current Liabilities

Current liabilities generally maintain a high level throughout the period, mostly ranging between approximately 7.6 billion USD and 11.0 billion USD. There is a marked increase in liabilities during 2015 and into early 2016, with peaks over 10 billion USD manifesting several times from 2016 onwards. Notably, liabilities reach their highest point in December 2019 at 11.07 billion USD before declining sharply to 7.43 billion USD by March 2020.

Cash Ratio

The cash ratio, reflecting the company's liquidity position relative to current liabilities, reveals substantial fluctuations. Initially, it declines from 0.28 in March 2015 to a low of 0.06 in June 2016, indicating decreased liquidity relative to obligations. This is followed by a dramatic increase to 3.41 in September 2016, coinciding with the surge in cash assets. After this peak, the ratio declines again but remains above 0.5 in most quarters during 2017 and 2019, showing improved but variable liquidity levels. The ratio shows some recovery in the first quarter of 2020 to 0.35, suggesting a moderate liquidity position at that time.

Overall, the data display a pattern of sharp increases and decreases in cash assets, juxtaposed with consistently high current liabilities. The liquidity situation, as measured by the cash ratio, has experienced significant volatility but shows signs of stabilization at a moderate level in recent quarters. These dynamics could indicate periods of strategic cash deployment or financing activities, necessitating monitoring of liquidity management and working capital strategies.