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 liquidity position of the organization exhibited extreme volatility over the six-year period analyzed, characterized by a notable anomaly in 2017 across all measured metrics. Following this peak, liquidity ratios converged toward more stable, though lower, levels through 2021.
- Current Ratio
- A substantial increase was observed in 2017, where the ratio reached 5.58, compared to 1.45 in 2016. This was followed by a sharp correction to 1.03 in 2018. For the remainder of the period, the ratio stabilized, ending at 1.33 in 2021, indicating a general capacity to cover short-term obligations with current assets.
- Quick Ratio
- The quick ratio mirrored the trend of the current ratio, spiking to 4.77 in 2017 before dropping to 0.50 in 2018. From 2018 to 2021, the ratio remained below 1.0, with a temporary recovery to 0.91 in 2020. The consistent gap between the current and quick ratios suggests that inventory constitutes a significant portion of current assets.
- Cash Ratio
- The most volatile of the three metrics, the cash ratio peaked at 4.25 in 2017 and reached a period low of 0.11 in 2019. A recovery was noted in 2020 and 2021, ending the period at 0.36. This reflects a limited reliance on the immediate availability of cash to meet short-term liabilities during the majority of the observed timeframe.
The divergent trends between 2017 and subsequent years suggest a significant one-time liquidity event or balance sheet restructuring. While the current ratio remains above the 1.0 threshold, the quick and cash ratios indicate a leaner approach to immediate liquidity management in the latter half of the analyzed period.
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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 | — | — | — | — | — | |
| Elevance Health Inc. | 1.47 | — | — | — | — | — | |
| Intuitive Surgical Inc. | 5.08 | — | — | — | — | — | |
| Medtronic PLC | 2.65 | — | — | — | — | — | |
| UnitedHealth Group Inc. | 0.79 | — | — | — | — | — | |
| Current Ratio, Sector | |||||||
| Health Care Equipment & Services | 1.22 | — | — | — | — | — | |
| Current Ratio, Industry | |||||||
| Health Care | 1.31 | — | — | — | — | — | |
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 liquidity profile exhibited significant volatility between 2016 and 2021, characterized by an anomalous peak in 2017 followed by a period of normalization. Although the current ratio remained above 1.0 throughout the observed period, indicating a consistent ability to meet short-term obligations, the wide fluctuations in current assets and liabilities suggest substantial shifts in working capital management.
- 2017 Liquidity Expansion
- A sharp increase in the current ratio to 5.58 was observed in 2017. This was driven by a substantial rise in current assets to 18,633 million US dollars and a concurrent decrease in current liabilities to 3,342 million US dollars, resulting in an exceptionally high liquidity position.
- 2018 Correction and Tightening
- The current ratio experienced a significant contraction to 1.03 in 2018, the lowest point in the analyzed timeframe. This decline coincided with a reduction in current assets to 7,411 million US dollars and a sharp increase in current liabilities to 7,216 million US dollars, narrowing the margin of safety for short-term debt coverage.
- 2019 to 2021 Stabilization Trend
- Following the 2018 low, the current ratio showed a gradual recovery, moving to 1.18 in 2019 and reaching 1.54 in 2020. By September 30, 2021, the ratio settled at 1.33, with current assets at 8,838 million US dollars and current liabilities at 6,626 million US dollars, reflecting a stabilized liquidity posture compared to the preceding years.
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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 | — | — | — | — | — | |
| Elevance Health Inc. | 1.33 | — | — | — | — | — | |
| Intuitive Surgical Inc. | 4.34 | — | — | — | — | — | |
| Medtronic PLC | 1.91 | — | — | — | — | — | |
| UnitedHealth Group Inc. | 0.72 | — | — | — | — | — | |
| Quick Ratio, Sector | |||||||
| Health Care Equipment & Services | 1.04 | — | — | — | — | — | |
| Quick Ratio, Industry | |||||||
| Health Care | 1.00 | — | — | — | — | — | |
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.
The liquidity profile from 2016 to 2021 is characterized by significant volatility, specifically regarding the relationship between quick assets and current liabilities. For the majority of the observed period, the quick ratio remained below 1.0, indicating that liquid assets were insufficient to cover immediate short-term obligations, with one notable exception.
- Quick Ratio Volatility
- A substantial deviation occurred in 2017, where the quick ratio peaked at 4.77, a sharp increase from 0.72 in 2016. This was followed by a significant correction in 2018, with the ratio dropping to 0.50. Between 2019 and 2021, the ratio showed a gradual recovery, reaching 0.91 in 2020 before settling at 0.74 by September 30, 2021.
- Quick Asset Dynamics
- Total quick assets exhibited an anomalous surge in 2017, rising to 15,944 million US dollars from 3,186 million US dollars in 2016. This value normalized rapidly in 2018 to 3,572 million US dollars. From 2019 to 2021, quick assets fluctuated within a narrower range between 2,965 million and 5,335 million US dollars.
- Current Liability Trends
- Current liabilities showed an inconsistent trajectory, decreasing to 3,342 million US dollars in 2017 before spiking to a period high of 7,216 million US dollars in 2018. In the subsequent years, liabilities remained elevated, staying above 5,600 million US dollars, which placed downward pressure on the liquidity ratios.
The overall trend suggests a period of extreme liquidity instability centered around the 2017-2018 window. The subsequent stabilization indicates a consistent operational pattern where current liabilities exceed quick assets, reflecting a tighter liquidity position in the latter years of the analysis.
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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 | — | — | — | — | — | |
| Elevance Health Inc. | 0.95 | — | — | — | — | — | |
| Intuitive Surgical Inc. | 3.66 | — | — | — | — | — | |
| Medtronic PLC | 1.27 | — | — | — | — | — | |
| UnitedHealth Group Inc. | 0.36 | — | — | — | — | — | |
| Cash Ratio, Sector | |||||||
| Health Care Equipment & Services | 0.64 | — | — | — | — | — | |
| Cash Ratio, Industry | |||||||
| Health Care | 0.60 | — | — | — | — | — | |
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.
The liquidity profile of the organization exhibits significant volatility in the cash ratio between 2016 and 2021, characterized by an extreme peak in 2017 followed by a sharp contraction and a subsequent partial recovery.
- Cash Asset Fluctuations
- Total cash assets experienced a substantial surge in 2017, reaching 14,200 million US dollars, which drove the cash ratio to a peak of 4.25. Following this outlier, cash reserves declined precipitously to a period low of 620 million US dollars in 2019. A recovery phase began in 2020, with assets rising to 2,937 million US dollars before slightly receding to 2,404 million US dollars in 2021.
- Current Liability Trends
- Current liabilities showed an inconsistent trend, decreasing to 3,342 million US dollars in 2017 before spiking to a high of 7,216 million US dollars in 2018. Obligations remained elevated throughout the remainder of the period, ending at 6,626 million US dollars in 2021. The simultaneous increase in liabilities and decrease in cash assets between 2017 and 2019 led to a severe compression of the liquidity ratio.
- Cash Ratio Performance
- The cash ratio demonstrates a cyclical pattern. After the 2017 peak of 4.25, the ratio fell sharply to 0.17 in 2018 and reached its nadir at 0.11 in 2019. The ratio rebounded to 0.50 in 2020 and normalized to 0.36 in 2021. This final value indicates that the organization's immediate liquidity position in 2021 returned to the exact level observed at the beginning of the analyzed period in 2016.
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