Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Baxter International Inc., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
The analysis of liquidity ratios over the reported quarters reveals several notable trends and fluctuations.
- Current Ratio
- The current ratio exhibited a general decline from 2.00 in March 2011 to a low of 1.60 in March 2015, indicating a gradual decrease in short-term liquidity during this period. However, intermittent improvements were observed, such as a peak at 2.70 in March 2013 and 2.30 in June 2015. Overall, the ratio remained above 1.5 throughout most periods, suggesting that current assets consistently exceeded current liabilities, albeit with some volatility.
- Quick Ratio
- The quick ratio demonstrated more pronounced variability, fluctuating between a low of 0.82 in the last quarter of 2014 and a high of 1.84 in June 2013. The ratio showed a general downward trend from 1.17 in March 2011 to around 0.82 in late 2014, reflecting a reduction in liquid assets relative to current liabilities. Notable increases occurred in mid-2013 and mid-2015, reaching values above 1.3, which suggest periodic strengthening in the company's ability to cover immediate obligations without relying on inventory.
- Cash Ratio
- The cash ratio showed the greatest degree of fluctuation, ranging from a high of 1.33 in June 2013 to lows around 0.32 to 0.36 in mid-2014. This indicates varying levels of cash and cash equivalents relative to current liabilities. The ratio declined notably during 2013 and 2014, before recovering to values exceeding 1.00 in early to mid-2015, implying an increase in readily available cash for meeting short-term liabilities during that period. However, a decrease occurred again in mid-2016, ending at 0.71.
In summary, the company maintained adequate current ratios across the review period, although trends suggest some periods of tightening liquidity. The quick and cash ratios' variability indicates fluctuations in more liquid asset availability, possibly reflecting changes in operational efficiency, working capital management, or cash flow patterns. The intermittent improvements in liquidity ratios, particularly in 2013 and 2015, may signal successful efforts to strengthen financial flexibility during those times.
Current Ratio
Baxter International Inc., current ratio calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Current assets | 6,823) | 8,017) | 11,796) | 11,138) | 14,497) | 9,734) | 10,351) | 9,631) | 9,487) | 9,388) | 10,004) | 9,597) | 12,185) | 8,814) | 9,260) | 9,105) | 8,048) | 8,117) | 8,650) | 8,002) | 7,809) | 7,761) | |||||||
| Current liabilities | 3,723) | 3,823) | 5,750) | 5,981) | 6,312) | 6,074) | 6,042) | 5,990) | 5,795) | 5,645) | 5,906) | 4,996) | 4,516) | 4,778) | 4,759) | 4,458) | 4,870) | 4,857) | 4,857) | 4,165) | 4,031) | 3,889) | |||||||
| Liquidity Ratio | |||||||||||||||||||||||||||||
| Current ratio1 | 1.83 | 2.10 | 2.05 | 1.86 | 2.30 | 1.60 | 1.71 | 1.61 | 1.64 | 1.66 | 1.69 | 1.92 | 2.70 | 1.84 | 1.95 | 2.04 | 1.65 | 1.67 | 1.78 | 1.92 | 1.94 | 2.00 | |||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Current Ratio, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Elevance Health Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Intuitive Surgical Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Medtronic PLC | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| UnitedHealth Group Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q2 2016 Calculation
Current ratio = Current assets ÷ Current liabilities
= 6,823 ÷ 3,723 = 1.83
2 Click competitor name to see calculations.
- Current Assets
- The current assets show a fluctuating trend over the periods analyzed. Beginning at 7,761 million US dollars at the end of Q1 2011, there is a general upward movement with peaks notably occurring in Q2 2013 (12,185 million) and Q2 2015 (14,497 million). However, these peaks are followed by significant declines, particularly in the latest two quarters, where current assets drop to 8,017 million and 6,823 million respectively. This indicates periods of increased liquidity interspersed with sizable reductions in current assets.
- Current Liabilities
- Current liabilities generally trend upward from 3,889 million US dollars in Q1 2011 to a peak around 6,312 million in Q2 2015. Thereafter, there is a noticeable decline toward the end of the data period, falling to 3,823 million and 3,723 million in the last two quarters. The increase in liabilities is steady and less volatile compared to current assets, but the recent downward shift may reflect a reduction in short-term obligations or changes in working capital management.
- Current Ratio
- The current ratio, calculated as current assets divided by current liabilities, exhibits considerable seasonal and periodical variation. It starts above 2.0 in early 2011, then declines gradually to around 1.6–1.7 for much of 2012 through early 2014, suggesting a reduced margin of short-term liquidity. A marked increase occurs in mid-2013 (2.7 ratio), associated with a spike in current assets, indicating improved liquidity. Subsequently, the ratio fluctuates around 1.6 to 2.3 through 2014 and 2015, followed by a decline toward the end of the monitored period reaching 1.83. This pattern reflects periods of strengthened liquidity followed by contractions, corresponding closely with the swings in current assets and liabilities.
- Overall Analysis
- The data reveals a cyclical behavior in current assets and the current ratio, with significant peaks every few quarters followed by sharp declines. The upswings may be driven by temporary increases in assets such as receivables or inventory, or strategic accumulation of liquidity, while the downswings may result from asset liquidation or changes in operational cycles. Current liabilities increase at a steadier pace initially but also decline towards the end, indicating possible adjustments in short-term debt or payables management. The volatility in liquidity ratios suggests fluctuating short-term financial stability, emphasizing the need for careful monitoring of working capital components and their impact on liquidity over time.
Quick Ratio
Baxter International Inc., quick ratio calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Cash and equivalents | 2,630) | 2,211) | 2,213) | 1,970) | 6,680) | 2,530) | 2,925) | 2,078) | 1,866) | 2,049) | 2,733) | 2,376) | 5,989) | 2,689) | 3,270) | 3,191) | 2,353) | 2,272) | 2,905) | 2,338) | 2,018) | 2,168) | |||||||
| Accounts and other current receivables, net | 1,813) | 1,830) | 1,731) | 1,772) | 2,852) | 2,599) | 2,803) | 2,842) | 2,914) | 2,708) | 2,911) | 2,766) | 2,342) | 2,319) | 2,425) | 2,324) | 2,225) | 2,341) | 2,420) | 2,347) | 2,491) | 2,399) | |||||||
| Investment in Baxalta common stock | —) | 1,232) | 5,148) | 4,156) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | |||||||
| Total quick assets | 4,443) | 5,273) | 9,092) | 7,898) | 9,532) | 5,129) | 5,728) | 4,920) | 4,780) | 4,757) | 5,644) | 5,142) | 8,331) | 5,008) | 5,695) | 5,515) | 4,578) | 4,613) | 5,325) | 4,685) | 4,509) | 4,567) | |||||||
| Current liabilities | 3,723) | 3,823) | 5,750) | 5,981) | 6,312) | 6,074) | 6,042) | 5,990) | 5,795) | 5,645) | 5,906) | 4,996) | 4,516) | 4,778) | 4,759) | 4,458) | 4,870) | 4,857) | 4,857) | 4,165) | 4,031) | 3,889) | |||||||
| Liquidity Ratio | |||||||||||||||||||||||||||||
| Quick ratio1 | 1.19 | 1.38 | 1.58 | 1.32 | 1.51 | 0.84 | 0.95 | 0.82 | 0.82 | 0.84 | 0.96 | 1.03 | 1.84 | 1.05 | 1.20 | 1.24 | 0.94 | 0.95 | 1.10 | 1.12 | 1.12 | 1.17 | |||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Quick Ratio, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Elevance Health Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Intuitive Surgical Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Medtronic PLC | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| UnitedHealth Group Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q2 2016 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 4,443 ÷ 3,723 = 1.19
2 Click competitor name to see calculations.
- Trend in Total Quick Assets
- The total quick assets display notable volatility throughout the observed periods. Initially, there is a slight decline from 4,567 million USD in March 2011 to 4,509 million USD in June 2011, followed by a general upward trajectory reaching a peak of 9,532 million USD in June 2015. However, this peak is preceded and succeeded by several fluctuations, including a significant drop from 8,331 million USD in June 2013 to 5,142 million USD in September 2013. After the peak in mid-2015, there is a marked decrease to 4,443 million USD by June 2016.
- Trend in Current Liabilities
- Current liabilities show a moderately increasing trend over the same time frame, starting at 3,889 million USD in March 2011 and climbing steadily to around 6,312 million USD by June 2015. After this peak, total current liabilities decrease sharply to 3,723 million USD by June 2016. This pattern indicates a build-up of short-term obligations over time, with a relatively sudden reduction in the last observed quarter.
- Analysis of Quick Ratio
- The quick ratio, which measures liquidity by comparing quick assets to current liabilities, exhibits considerable fluctuations aligning with movements in both quick assets and current liabilities. Initially, it remains slightly above 1.1 in early 2011, then dips below 1.0 during mid-2012 through early 2014, reaching a low of 0.82 in June and September 2014. This suggests tightening liquidity during that period. Subsequently, a recovery is evident from 2015 onward, with the ratio increasing sharply to 1.58 in December 2015, reflecting improved short-term financial health. Towards mid-2016, it declines somewhat but remains above 1.1.
- Key Insights
- The data reveals cyclical liquidity fluctuations marked by periods of both tightening and easing short-term financial positions. The sharp increases in quick assets and quick ratio during mid-2013 and 2015 indicate episodes of stronger liquidity, potentially reflecting strategic asset management or changes in working capital. Conversely, the periods of decreased quick ratio below 1.0 suggest relatively constrained liquidity, possibly due to rising current liabilities or reduced liquid asset levels. The significant decrease in both quick assets and current liabilities in mid-2016 may indicate a substantial restructuring of short-term assets and obligations.
Cash Ratio
Baxter International Inc., cash ratio calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Cash and equivalents | 2,630) | 2,211) | 2,213) | 1,970) | 6,680) | 2,530) | 2,925) | 2,078) | 1,866) | 2,049) | 2,733) | 2,376) | 5,989) | 2,689) | 3,270) | 3,191) | 2,353) | 2,272) | 2,905) | 2,338) | 2,018) | 2,168) | |||||||
| Investment in Baxalta common stock | —) | 1,232) | 5,148) | 4,156) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | |||||||
| Total cash assets | 2,630) | 3,443) | 7,361) | 6,126) | 6,680) | 2,530) | 2,925) | 2,078) | 1,866) | 2,049) | 2,733) | 2,376) | 5,989) | 2,689) | 3,270) | 3,191) | 2,353) | 2,272) | 2,905) | 2,338) | 2,018) | 2,168) | |||||||
| Current liabilities | 3,723) | 3,823) | 5,750) | 5,981) | 6,312) | 6,074) | 6,042) | 5,990) | 5,795) | 5,645) | 5,906) | 4,996) | 4,516) | 4,778) | 4,759) | 4,458) | 4,870) | 4,857) | 4,857) | 4,165) | 4,031) | 3,889) | |||||||
| Liquidity Ratio | |||||||||||||||||||||||||||||
| Cash ratio1 | 0.71 | 0.90 | 1.28 | 1.02 | 1.06 | 0.42 | 0.48 | 0.35 | 0.32 | 0.36 | 0.46 | 0.48 | 1.33 | 0.56 | 0.69 | 0.72 | 0.48 | 0.47 | 0.60 | 0.56 | 0.50 | 0.56 | |||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Cash Ratio, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Elevance Health Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Intuitive Surgical Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Medtronic PLC | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| UnitedHealth Group Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q2 2016 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 2,630 ÷ 3,723 = 0.71
2 Click competitor name to see calculations.
- Total Cash Assets
-
The total cash assets exhibit considerable variability across the reported periods. Initially, a moderate level around 2,000 to 3,000 million US dollars is observed. Notably, there is a sharp increase in June 2013, where cash assets peak at 5,989 million US dollars, followed by a decline in subsequent quarters. Another significant surge occurs in mid-2015, with cash assets reaching over 7,000 million US dollars in the fourth quarter. However, by mid-2016, the cash assets decrease again to approximately 2,600 million US dollars. This pattern suggests episodic large inflows or disposals affecting cash balances rather than a steady accumulation or depletion trend.
- Current Liabilities
-
Current liabilities maintain a generally upward trajectory throughout the timeframe, starting around 3,800 to 4,800 million US dollars in the early years and rising to a peak exceeding 6,300 million in late 2014 and early 2015. Subsequently, there is a notable reduction to around 3,700 to 3,800 million US dollars by mid-2016. This decrease may indicate repayment of short-term obligations or changes in working capital management. The overall trend suggests an expansion of short-term liabilities up to 2015 followed by a substantial contraction towards 2016.
- Cash Ratio
-
The cash ratio, reflecting liquidity by comparing cash assets to current liabilities, shows considerable fluctuation throughout the report periods. It starts at values around 0.5 to 0.6, indicating moderate liquidity. There is a substantial peak in June 2013 at 1.33, signaling a strong liquidity position, correlating with the significant cash assets increase at that time. After a period of decline maintaining levels below 0.5, the ratio again increases above 1.0 in mid to late 2015, aligning with increased cash assets and decreases in current liabilities. By mid-2016, the ratio declines to around 0.7 to 0.9, suggesting liquidity remains adequate but less robust than at prior peaks. Overall, liquidity positions oscillate significantly, with periods of high cash availability relative to liabilities interspersed with lower liquidity phases.
- General Observations
-
The data reflects a company experiencing periods of fluctuating liquidity and working capital. Large spikes in cash assets at certain points strongly influence the cash ratio, enhancing liquidity temporarily. The current liabilities trend suggests periods of increased short-term borrowing or payables, followed by notable reductions, possibly linked to operational cycles or strategic financial management. Such volatility in both cash and liabilities levels necessitates careful liquidity planning to ensure stable financial health. The interplay between cash assets and current liabilities governs the liquidity ratios, emphasizing the importance of synchronized management of both assets and obligations.