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).
An analysis of the liquidity position from 2020 through 2024 reveals a general tightening of short-term solvency, characterized by a peak in liquidity metrics during 2022 followed by a consistent decline. The company has consistently operated with a current ratio below 1.0, indicating that current liabilities have exceeded current assets throughout the analyzed period.
- Current Ratio
- The current ratio exhibited fluctuations, starting at 0.91 in 2020 and reaching a period high of 0.94 in 2022. However, a downward trend emerged thereafter, with the ratio falling to 0.86 in 2023 and further decreasing to 0.81 by December 31, 2024. This trajectory indicates a diminishing capacity to cover short-term obligations using total current assets.
- Quick Ratio
- The quick ratio followed a trajectory similar to the current ratio, peaking at 0.62 in 2022. While the 2024 value of 0.56 remains slightly higher than the 2020 level of 0.53, the metric has declined steadily since 2022. The persistent gap between the current and quick ratios suggests a significant reliance on inventory to meet short-term obligations.
- Cash Ratio
- The cash ratio demonstrates the most pronounced decline in the latter part of the period. After remaining stable at 0.18 in 2020 and 2021 and peaking at 0.23 in 2022, the ratio dropped to 0.14 in 2023 and reached a period low of 0.13 in 2024. This trend reflects a reduction in the most liquid assets available to satisfy immediate liabilities.
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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 | — | |
| Elevance Health Inc. | 1.45 | 1.44 | 1.40 | 1.47 | — | |
| Intuitive Surgical Inc. | 4.07 | 4.76 | 4.40 | 5.08 | — | |
| Medtronic PLC | 2.03 | 2.39 | 1.86 | 2.65 | — | |
| UnitedHealth Group Inc. | 0.83 | 0.79 | 0.77 | 0.79 | — | |
| Current Ratio, Sector | ||||||
| Health Care Equipment & Services | 1.15 | 1.15 | 1.13 | 1.22 | — | |
| Current Ratio, Industry | ||||||
| Health Care | 1.21 | 1.23 | 1.23 | 1.31 | — | |
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 company's liquidity position has experienced a consistent decline over the analyzed five-year period, characterized by current liabilities growing at a rate that outpaces the growth of current assets.
- Current Assets Analysis
- A steady upward trend is observed in current assets, which increased from US$ 56,369 million in 2020 to US$ 68,645 million in 2024. This represents a continuous expansion of short-term resources over the duration of the period.
- Current Liabilities Analysis
- Current liabilities demonstrated a more pronounced increase, rising from US$ 62,017 million in 2020 to US$ 84,609 million in 2024. The growth in obligations accelerated significantly between 2022 and 2024, placing greater pressure on the company's short-term financial obligations.
- Current Ratio Performance
- The current ratio remained below 1.0 for the entirety of the period, indicating that short-term liabilities consistently exceeded current assets. While a slight recovery occurred in 2022, reaching 0.94, the ratio subsequently declined to a period low of 0.81 by December 31, 2024. This downward trajectory suggests a weakening capacity to cover immediate liabilities using current assets.
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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 | — | |
| Elevance Health Inc. | 1.32 | 1.30 | 1.27 | 1.33 | — | |
| Intuitive Surgical Inc. | 3.00 | 3.83 | 3.56 | 4.34 | — | |
| Medtronic PLC | 1.31 | 1.54 | 1.30 | 1.91 | — | |
| UnitedHealth Group Inc. | 0.75 | 0.73 | 0.70 | 0.72 | — | |
| Quick Ratio, Sector | ||||||
| Health Care Equipment & Services | 0.97 | 0.97 | 0.95 | 1.04 | — | |
| Quick Ratio, Industry | ||||||
| Health Care | 0.88 | 0.90 | 0.93 | 1.00 | — | |
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.
The analysis of liquidity trends between 2020 and 2024 reveals a period of initial improvement in the company's immediate solvency position, followed by a gradual decline. Although total quick assets increased consistently throughout the five-year period, the growth in current liabilities eventually outpaced the accumulation of liquid assets, leading to a compression of the quick ratio in the final two years.
- Quick Asset Accumulation
- Total quick assets demonstrated a continuous upward trajectory, rising from 32,596 million US$ in 2020 to 47,462 million US$ by 2024. The most significant growth occurred between 2021 and 2022, where assets increased by approximately 16.3%, contributing to a temporary strengthening of the liquidity profile.
- Current Liabilities Expansion
- Current liabilities grew steadily from 62,017 million US$ in 2020 to 84,609 million US$ in 2024. A notable acceleration in the growth of short-term obligations is observed between 2022 and 2023, with liabilities increasing by approximately 13.5% in a single year, which placed downward pressure on the liquidity ratio.
- Quick Ratio Performance
- The quick ratio exhibited a peak of 0.62 in 2022, up from 0.53 in 2020, indicating a period where liquid asset growth exceeded the rise in short-term debt. However, this trend reversed after 2022, with the ratio declining to 0.59 in 2023 and further to 0.56 in 2024. The consistent value below 1.0 suggests that the company relies on other current assets, such as inventory, or operational cash flow to meet its short-term obligations.
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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 | — | |
| Elevance Health Inc. | 0.85 | 0.87 | 0.86 | 0.95 | — | |
| Intuitive Surgical Inc. | 2.30 | 3.15 | 2.90 | 3.66 | — | |
| Medtronic PLC | 0.74 | 0.88 | 0.85 | 1.27 | — | |
| UnitedHealth Group Inc. | 0.28 | 0.34 | 0.36 | 0.36 | — | |
| Cash Ratio, Sector | ||||||
| Health Care Equipment & Services | 0.49 | 0.55 | 0.58 | 0.64 | — | |
| Cash Ratio, Industry | ||||||
| Health Care | 0.46 | 0.50 | 0.54 | 0.60 | — | |
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.
An analysis of the liquidity position from 2020 to 2024 reveals a period of fluctuation in cash holdings contrasted by a steady increase in short-term obligations. While the liquidity posture was stable and experienced a brief improvement in the early part of the period, a notable decline in the cash ratio is observed over the most recent two fiscal years.
- Total Cash Assets
- Cash assets demonstrated an upward trajectory from 10,854 million US$ in 2020 to a peak of 15,723 million US$ in 2022. Following this peak, a contraction occurred, with cash reserves decreasing to 11,455 million US$ in 2023 and further declining to 10,993 million US$ by the end of 2024.
- Current Liabilities
- A consistent year-over-year increase in current liabilities is observed throughout the reporting period. Short-term obligations rose from 62,017 million US$ in 2020 to 84,609 million US$ in 2024, indicating a steady growth in the company's immediate financial commitments.
- Cash Ratio
- The cash ratio remained constant at 0.18 during 2020 and 2021, before reaching a maximum of 0.23 in 2022. A significant downward trend followed, with the ratio falling to 0.14 in 2023 and reaching 0.13 in 2024. This deterioration in the ratio is the result of the simultaneous decrease in available cash and the continuous expansion of current liabilities, suggesting a reduced capacity to cover short-term debts using only cash and cash equivalents.
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