Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Becton, Dickinson & Co., liquidity ratios
Based on: 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30).
The analysis of the financial liquidity ratios over the six-year period reveals significant fluctuations in the company's ability to meet short-term obligations.
- Current Ratio
- The current ratio exhibited a pronounced peak in the fiscal year ending September 30, 2017, reaching 5.58, substantially higher than the surrounding years. This indicates an exceptional surplus in current assets relative to current liabilities during that year. However, this ratio then dropped sharply to 1.03 in 2018 and stabilized around an average of approximately 1.35 in the subsequent years, reflecting more normalized and balanced liquidity positions.
- Quick Ratio
- The quick ratio followed a similar pattern to the current ratio, with a marked increase to 4.77 in 2017, highlighting an unusually high proportion of liquid assets excluding inventories. This was followed by a steep decline back to levels around 0.5 in 2018 and 2019, then a gradual recovery approaching 0.74 by 2021. The fluctuation suggests considerable variation in highly liquid asset holdings within the current asset mix across these years.
- Cash Ratio
- The cash ratio also peaked significantly in 2017 at 4.25, indicating substantial cash and cash equivalents relative to current liabilities in that year. This was followed by a dramatic decrease to 0.17 and 0.11 in the immediate years after, showing a substantial reduction in cash reserves relative to obligations. Subsequently, there was a modest increase, reaching 0.36 by 2021, suggesting a cautious rebuilding of cash reserves.
Overall, the liquidity ratios demonstrate an unusual liquidity surplus in 2017, which did not persist in subsequent years. The return to more moderate ratios after 2017 suggests normalization in liquidity management, with the company maintaining adequate but not excessive liquidity levels. These trends may reflect strategic financial management decisions or changes in operational cash flow during the period assessed.
Current Ratio
Becton, Dickinson & Co., current ratio calculation, comparison to benchmarks
| Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current assets | 8,838) | 8,969) | 6,664) | 7,411) | 18,633) | 6,367) | |
| Current liabilities | 6,626) | 5,836) | 5,655) | 7,216) | 3,342) | 4,400) | |
| Liquidity Ratio | |||||||
| Current ratio1 | 1.33 | 1.54 | 1.18 | 1.03 | 5.58 | 1.45 | |
| Benchmarks | |||||||
| Current Ratio, Competitors2 | |||||||
| Abbott Laboratories | 1.85 | 1.72 | — | — | — | — | |
| CVS Health Corp. | 0.88 | 0.91 | — | — | — | — | |
| Elevance Health Inc. | 1.47 | 1.55 | — | — | — | — | |
| Intuitive Surgical Inc. | 5.08 | 6.86 | — | — | — | — | |
| Medtronic PLC | 2.65 | 2.13 | — | — | — | — | |
| UnitedHealth Group Inc. | 0.79 | 0.74 | — | — | — | — | |
| Current Ratio, Sector | |||||||
| Health Care Equipment & Services | 1.11 | 1.10 | — | — | — | — | |
| Current Ratio, Industry | |||||||
| Health Care | 1.24 | 1.24 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30).
1 2021 Calculation
Current ratio = Current assets ÷ Current liabilities
= 8,838 ÷ 6,626 = 1.33
2 Click competitor name to see calculations.
The analysis of the financial data over the six-year period reveals fluctuating trends in current assets, current liabilities, and the current ratio.
- Current Assets
- The value of current assets displayed significant volatility. There was a substantial increase from 6,367 million USD in 2016 to 18,633 million USD in 2017, followed by a sharp decrease to 7,411 million USD in 2018. Subsequently, the assets declined further to 6,664 million USD in 2019. From 2020 onwards, current assets rose again to 8,969 million USD in 2020 but slightly decreased to 8,838 million USD in 2021. This pattern indicates an unstable but overall increasing trend from 2019 to 2021.
- Current Liabilities
- Current liabilities showed irregular movements throughout the period. Initially, they decreased from 4,400 million USD in 2016 to 3,342 million USD in 2017. Afterwards, liabilities more than doubled to 7,216 million USD in 2018 but then declined to 5,655 million USD in 2019. The liabilities increased steadily from 5,836 million USD in 2020 to 6,626 million USD in 2021. This fluctuation reflects variability in short-term obligations with a recent upward trend.
- Current Ratio
- The current ratio, an indicator of liquidity, varied considerably during the period. It peaked markedly at 5.58 in 2017, signaling exceptionally strong short-term liquidity that year. However, it then rapidly decreased to near parity at 1.03 in 2018, indicating a tighter liquidity position. From 2019 to 2021, the ratio oscillated between 1.18 and 1.54, settling at 1.33 in 2021, suggesting moderate liquidity and a balanced ability to cover current liabilities with current assets.
Overall, the data reflects volatility within the company's current asset base and liabilities, with corresponding impacts on liquidity ratios. Such fluctuations could point to varying operational or financial strategies, cash flow management, or external economic factors influencing working capital components over the years.
Quick Ratio
Becton, Dickinson & Co., quick ratio calculation, comparison to benchmarks
| Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Cash and equivalents | 2,283) | 2,825) | 536) | 1,140) | 14,179) | 1,541) | |
| Restricted cash | 109) | 92) | 54) | 96) | —) | —) | |
| Short-term investments | 12) | 20) | 30) | 17) | 21) | 27) | |
| Trade receivables, net | 2,497) | 2,398) | 2,345) | 2,319) | 1,744) | 1,618) | |
| Total quick assets | 4,901) | 5,335) | 2,965) | 3,572) | 15,944) | 3,186) | |
| Current liabilities | 6,626) | 5,836) | 5,655) | 7,216) | 3,342) | 4,400) | |
| Liquidity Ratio | |||||||
| Quick ratio1 | 0.74 | 0.91 | 0.52 | 0.50 | 4.77 | 0.72 | |
| Benchmarks | |||||||
| Quick Ratio, Competitors2 | |||||||
| Abbott Laboratories | 1.28 | 1.14 | — | — | — | — | |
| CVS Health Corp. | 0.55 | 0.53 | — | — | — | — | |
| Elevance Health Inc. | 1.33 | 1.42 | — | — | — | — | |
| Intuitive Surgical Inc. | 4.34 | 5.96 | — | — | — | — | |
| Medtronic PLC | 1.91 | 1.50 | — | — | — | — | |
| UnitedHealth Group Inc. | 0.72 | 0.68 | — | — | — | — | |
| Quick Ratio, Sector | |||||||
| Health Care Equipment & Services | 0.87 | 0.85 | — | — | — | — | |
| Quick Ratio, Industry | |||||||
| Health Care | 0.93 | 0.91 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30).
1 2021 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 4,901 ÷ 6,626 = 0.74
2 Click competitor name to see calculations.
- Quick Assets Trend
- The total quick assets showed notable volatility over the analyzed period. Starting at 3,186 million USD in 2016, there was a substantial and sharp increase to 15,944 million USD in 2017. However, this was followed by a significant decline in 2018 to 3,572 million USD, and a further decrease in 2019 to 2,965 million USD. From 2020 onward, total quick assets increased again to 5,335 million USD but slightly declined to 4,901 million USD in 2021. This pattern indicates periods of sudden liquidity increases followed by retrenchment, suggesting possible fluctuation in liquid asset management or atypical transactions impacting quick assets.
- Current Liabilities Trend
- Current liabilities fluctuated during the period but showed a generally upward trend. The liabilities decreased from 4,400 million USD in 2016 to 3,342 million USD in 2017, followed by a sharp increase to 7,216 million USD in 2018. In the subsequent years, current liabilities dropped to 5,655 million USD in 2019 but then gradually increased to 5,836 million USD in 2020 and further to 6,626 million USD in 2021. The overall increase in current liabilities from 2016 to 2021 may indicate a rising short-term obligation load, which could impact liquidity position if not matched by asset growth.
- Quick Ratio Trend
- The quick ratio exhibited significant fluctuations, mirroring the volatility in quick assets and current liabilities. Initially, the ratio was 0.72 in 2016, which then surged notably to 4.77 in 2017, indicating an exceptionally strong short-term liquidity position that year. However, it declined sharply to 0.50 in 2018 and remained low at 0.52 in 2019. The ratio improved thereafter to 0.91 in 2020 but decreased again to 0.74 in 2021. Despite some recovery, the quick ratio stayed below 1.0 in most years except 2017 and 2020, suggesting limited coverage of current liabilities by quick assets in those periods and potential liquidity risk concerns.
- Overall Liquidity Analysis
- The data illustrates a volatile liquidity profile across the analyzed years, with sharp peaks and troughs in quick assets and corresponding fluctuations in the quick ratio. The spike in 2017 represents an outlier in liquidity strength, whereas other years indicate tighter short-term liquidity conditions. The general upward trend in current liabilities, without a proportional and consistent increase in quick assets, highlights potential increasing pressure on liquidity. The quick ratio values below one in four out of six years point to the need for close monitoring of short-term obligations and asset management to ensure adequate liquidity coverage.
Cash Ratio
Becton, Dickinson & Co., cash ratio calculation, comparison to benchmarks
| Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Cash and equivalents | 2,283) | 2,825) | 536) | 1,140) | 14,179) | 1,541) | |
| Restricted cash | 109) | 92) | 54) | 96) | —) | —) | |
| Short-term investments | 12) | 20) | 30) | 17) | 21) | 27) | |
| Total cash assets | 2,404) | 2,937) | 620) | 1,253) | 14,200) | 1,568) | |
| Current liabilities | 6,626) | 5,836) | 5,655) | 7,216) | 3,342) | 4,400) | |
| Liquidity Ratio | |||||||
| Cash ratio1 | 0.36 | 0.50 | 0.11 | 0.17 | 4.25 | 0.36 | |
| Benchmarks | |||||||
| Cash Ratio, Competitors2 | |||||||
| Abbott Laboratories | 0.78 | 0.60 | — | — | — | — | |
| CVS Health Corp. | 0.18 | 0.18 | — | — | — | — | |
| Elevance Health Inc. | 0.95 | 1.04 | — | — | — | — | |
| Intuitive Surgical Inc. | 3.66 | 5.30 | — | — | — | — | |
| Medtronic PLC | 1.27 | 1.06 | — | — | — | — | |
| UnitedHealth Group Inc. | 0.36 | 0.33 | — | — | — | — | |
| Cash Ratio, Sector | |||||||
| Health Care Equipment & Services | 0.49 | 0.47 | — | — | — | — | |
| Cash Ratio, Industry | |||||||
| Health Care | 0.54 | 0.53 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30).
1 2021 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 2,404 ÷ 6,626 = 0.36
2 Click competitor name to see calculations.
- Total cash assets
- The total cash assets exhibited considerable volatility over the observed period. Starting at $1,568 million in 2016, there was a significant peak reaching $14,200 million in 2017, followed by a sharp decline to $1,253 million in 2018. The downward trend continued with the lowest value of $620 million in 2019. Subsequently, cash assets increased moderately to $2,937 million in 2020, but then slightly declined to $2,404 million in 2021.
- Current liabilities
- Current liabilities showed fluctuating movements during the years analyzed. From $4,400 million in 2016, liabilities decreased to $3,342 million in 2017. However, a marked increase occurred in 2018, reaching $7,216 million, followed by a decrease to $5,655 million in 2019. Subsequently, current liabilities rose slightly to $5,836 million in 2020 and further increased to $6,626 million in 2021.
- Cash ratio
- The cash ratio, reflecting liquidity by comparing cash assets to current liabilities, varied significantly across the periods. It was 0.36 in 2016, sharply increasing to 4.25 in 2017, indicating exceptionally strong liquidity that year. However, this ratio dropped drastically to 0.17 in 2018 and further to 0.11 in 2019, suggesting reduced liquidity. The cash ratio partially recovered to 0.50 in 2020 before declining again to 0.36 in 2021, marking moderate liquidity levels at the period’s end.
- Summary
- Overall, the company experienced substantial fluctuations in both cash assets and current liabilities, which influenced its liquidity position as reflected in the cash ratio. The peak in cash assets and high cash ratio in 2017 stands out as an anomaly, followed by a period of compressed liquidity from 2018 to 2019. Despite some recovery in cash holdings and liquidity in 2020, the figures slightly deteriorated again in 2021. The rising trend in current liabilities since 2018 highlights increasing short-term obligations, which, combined with the volatility in cash assets, suggests a need for close monitoring of working capital management and liquidity risk moving forward.