Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
CVS Health Corp., liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Current ratio | 0.81 | 0.86 | 0.94 | 0.88 | 0.91 | |
| Quick ratio | 0.56 | 0.59 | 0.62 | 0.55 | 0.53 | |
| Cash ratio | 0.13 | 0.14 | 0.23 | 0.18 | 0.18 |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Current Ratio
- The current ratio demonstrates a slight downward trend over the examined five-year period. Starting at 0.91 in 2020, it decreased marginally to 0.88 in 2021, then increased somewhat to 0.94 in 2022, followed by consecutive declines to 0.86 in 2023 and further to 0.81 in 2024. This pattern indicates a fluctuation in the company's short-term liquidity, with the most recent years showing a reduction in the ability to cover current liabilities with current assets.
- Quick Ratio
- The quick ratio shows a general increase from 0.53 in 2020 to a peak of 0.62 in 2022, reflecting an improvement in the company's ability to meet short-term obligations without relying on inventory. However, this ratio declined to 0.59 in 2023 and further to 0.56 in 2024, suggesting a slight decrease in liquid asset coverage against current liabilities in the last two years, though it remains higher than the initial 2020 value.
- Cash Ratio
- The cash ratio remained stable at 0.18 for the years 2020 and 2021, then experienced an increase to 0.23 in 2022, indicating a temporary rise in cash and cash equivalents relative to current liabilities. Subsequently, the ratio decreased to 0.14 in 2023 and further to 0.13 in 2024, showing a significant reduction in immediate liquidity in recent years. This decline may point to a lower cushion of cash reserves available for covering short-term obligations.
Current Ratio
CVS Health Corp., current ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 68,645) | 67,858) | 65,682) | 60,008) | 56,369) | |
| Current liabilities | 84,609) | 79,189) | 69,736) | 67,807) | 62,017) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 0.81 | 0.86 | 0.94 | 0.88 | 0.91 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Abbott Laboratories | 1.67 | 1.64 | 1.63 | 1.85 | 1.72 | |
| Elevance Health Inc. | 1.45 | 1.44 | 1.40 | 1.47 | 1.55 | |
| Intuitive Surgical Inc. | 4.07 | 4.76 | 4.40 | 5.08 | 6.86 | |
| Medtronic PLC | 2.03 | 2.39 | 1.86 | 2.65 | 2.13 | |
| UnitedHealth Group Inc. | 0.83 | 0.79 | 0.77 | 0.79 | 0.74 | |
| Current Ratio, Sector | ||||||
| Health Care Equipment & Services | 1.04 | 1.06 | 1.07 | 1.11 | 1.10 | |
| Current Ratio, Industry | ||||||
| Health Care | 1.14 | 1.17 | 1.19 | 1.24 | 1.24 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= 68,645 ÷ 84,609 = 0.81
2 Click competitor name to see calculations.
The financial data indicates a consistent increase in both current assets and current liabilities over the five-year period ending in 2024. Specifically, current assets grew from 56,369 million US dollars in 2020 to 68,645 million US dollars in 2024, showing steady growth each year. Similarly, current liabilities rose from 62,017 million US dollars in 2020 to 84,609 million US dollars in 2024, with notable increments year-over-year.
The current ratio, which measures liquidity by comparing current assets to current liabilities, exhibits a downward trend. Beginning at 0.91 in 2020, it decreased to 0.81 by 2024. This suggests that although current assets increased, current liabilities have grown at a faster pace, resulting in a slight weakening of the company's short-term liquidity position over the five years.
- Current Assets
- Displayed a steady upward trend, increasing annually from approximately 56.4 billion to 68.6 billion US dollars, indicating growth in the company’s liquid resources.
- Current Liabilities
- Showed a significant increase over the same period, growing from about 62.0 billion to 84.6 billion US dollars, outpacing the growth in current assets.
- Current Ratio
- Decreased from 0.91 to 0.81, reflecting a decline in the company's ability to cover short-term obligations with short-term assets. The ratio staying below 1 indicates that current liabilities consistently surpassed current assets across the timeframe.
Overall, while the company has been expanding its current assets base, the faster growth in current liabilities suggests increasing short-term financial obligations. The declining current ratio warrants close monitoring as it may imply potential liquidity challenges if the trend continues.
Quick Ratio
CVS Health Corp., quick ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 8,586) | 8,196) | 12,945) | 9,408) | 7,854) | |
| Investments | 2,407) | 3,259) | 2,778) | 3,117) | 3,000) | |
| Accounts receivable, net | 36,469) | 35,227) | 27,276) | 24,431) | 21,742) | |
| Total quick assets | 47,462) | 46,682) | 42,999) | 36,956) | 32,596) | |
| Current liabilities | 84,609) | 79,189) | 69,736) | 67,807) | 62,017) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 0.56 | 0.59 | 0.62 | 0.55 | 0.53 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Abbott Laboratories | 1.05 | 1.00 | 1.06 | 1.28 | 1.14 | |
| Elevance Health Inc. | 1.32 | 1.30 | 1.27 | 1.33 | 1.42 | |
| Intuitive Surgical Inc. | 3.00 | 3.83 | 3.56 | 4.34 | 5.96 | |
| Medtronic PLC | 1.31 | 1.54 | 1.30 | 1.91 | 1.50 | |
| UnitedHealth Group Inc. | 0.75 | 0.73 | 0.70 | 0.72 | 0.68 | |
| Quick Ratio, Sector | ||||||
| Health Care Equipment & Services | 0.83 | 0.85 | 0.85 | 0.87 | 0.85 | |
| Quick Ratio, Industry | ||||||
| Health Care | 0.83 | 0.85 | 0.88 | 0.93 | 0.91 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 47,462 ÷ 84,609 = 0.56
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets exhibited a consistent upward trend over the five-year period. Starting from 32,596 million US dollars in 2020, the value increased each year, reaching 47,462 million US dollars by the end of 2024. This steady growth indicates an improvement in the company's most liquid assets.
- Current liabilities
- Current liabilities also showed an increasing trend throughout the period analyzed. The amount rose from 62,017 million US dollars in 2020 to 84,609 million US dollars in 2024. The rise was relatively consistent with slight acceleration in later years, suggesting an increasing short-term financial obligation for the company.
- Quick ratio
- The quick ratio, a liquidity measure, experienced moderate fluctuations across the five-year timeframe. It started at 0.53 in 2020, slightly increased to 0.55 in 2021, and then showed improvement to 0.62 in 2022. However, the ratio declined to 0.59 in 2023 and further to 0.56 in 2024. Despite the growth in quick assets, the quick ratio's decline in the last two years indicates that current liabilities increased at a higher rate, which may suggest a somewhat weakened liquidity position.
Cash Ratio
CVS Health Corp., cash ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 8,586) | 8,196) | 12,945) | 9,408) | 7,854) | |
| Investments | 2,407) | 3,259) | 2,778) | 3,117) | 3,000) | |
| Total cash assets | 10,993) | 11,455) | 15,723) | 12,525) | 10,854) | |
| Current liabilities | 84,609) | 79,189) | 69,736) | 67,807) | 62,017) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.13 | 0.14 | 0.23 | 0.18 | 0.18 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Abbott Laboratories | 0.56 | 0.53 | 0.66 | 0.78 | 0.60 | |
| Elevance Health Inc. | 0.85 | 0.87 | 0.86 | 0.95 | 1.04 | |
| Intuitive Surgical Inc. | 2.30 | 3.15 | 2.90 | 3.66 | 5.30 | |
| Medtronic PLC | 0.74 | 0.88 | 0.85 | 1.27 | 1.06 | |
| UnitedHealth Group Inc. | 0.28 | 0.34 | 0.36 | 0.36 | 0.33 | |
| Cash Ratio, Sector | ||||||
| Health Care Equipment & Services | 0.37 | 0.42 | 0.47 | 0.49 | 0.47 | |
| Cash Ratio, Industry | ||||||
| Health Care | 0.41 | 0.44 | 0.49 | 0.54 | 0.53 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 10,993 ÷ 84,609 = 0.13
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets displayed a rising trend from 2020 to 2022, increasing from 10,854 million US dollars in 2020 to 15,723 million US dollars in 2022. However, this trend reversed in the subsequent years, with cash assets declining to 11,455 million US dollars in 2023 and further slightly decreasing to 10,993 million US dollars in 2024.
- Current Liabilities
- Current liabilities demonstrated a consistent upward trajectory throughout the period. Beginning at 62,017 million US dollars in 2020, current liabilities increased steadily each year, reaching 84,609 million US dollars by the end of 2024. This indicates a significant growth in short-term obligations.
- Cash Ratio
- The cash ratio fluctuated during the years under review. It remained steady at 0.18 from 2020 to 2021, increased to 0.23 in 2022, and then experienced a notable decline, falling to 0.14 in 2023 and further to 0.13 in 2024. This decrease in the cash ratio in the latter years reflects a reduction in the company's liquidity relative to its current liabilities.
- Overall Analysis
- The data indicates a period of growth in cash reserves through 2022, followed by a decline in subsequent years, while current liabilities consistently increased, resulting in a declining cash ratio since 2022. This could suggest increasing liquidity pressure and a potential need for careful cash management to meet growing short-term obligations.