Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Edwards Lifesciences Corp., liquidity ratios (quarterly data)
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
- Current Ratio Trends
- The current ratio exhibited an overall upward trend from March 2018 through March 2021, starting at 2.07 and reaching a peak of 3.84. This indicates an improvement in short-term liquidity, suggesting the company increasingly held more current assets relative to current liabilities over this period. However, after the peak in the first quarter of 2021, the ratio began to decline, reaching 3.08 by the end of 2021, which indicates a slight reduction in liquidity cushion compared to the earlier peak.
- Quick Ratio Movements
- The quick ratio mirrored the trends of the current ratio but at generally lower values, indicating the exclusion of inventory from current assets. Starting at 1.48 in March 2018, it increased steadily to a high of 2.55 in the second quarter of 2021. Similar to the current ratio, it then decreased to 2.07 by the last quarter of 2021. This pattern suggests the company maintained a strong liquidity position throughout, with a slight moderation towards the end of the period.
- Cash Ratio Dynamics
- The cash ratio, representing the most conservative liquidity measure, also showed growth from 1.14 in March 2018 to a peak of 1.86 in the third quarter of 2021. The ratio remained reasonably stable after this peak, with a minor decline to 1.42 by the end of 2021. This indicates that the company maintained a solid cash reserve relative to its current liabilities, although the slight decline at the end of the reported period suggests a modest decrease in cash holdings or an increase in short-term liabilities.
- Overall Liquidity Analysis
- Across all three liquidity ratios, there was a consistent strengthening trend from 2018 through early 2021, reflecting enhanced short-term financial stability and improved capacity to meet current obligations without liquidity stress. The subsequent decline in these ratios in the latter half of 2021 might warrant attention but does not appear to indicate immediate concern. The company demonstrated a prudent liquidity management approach through the period, with frequent maintenance of ratios well above the critical threshold of 1.0, ensuring comfortable coverage of short-term liabilities.
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Current Ratio
Edwards Lifesciences Corp., current ratio calculation (quarterly data)
| Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||
| Current assets | 3,180,700) | 3,515,500) | 3,322,900) | 3,069,200) | 3,091,000) | 2,980,400) | 2,690,300) | 2,507,900) | 2,984,000) | 2,739,700) | 2,354,700) | 2,368,800) | 2,286,900) | 2,912,600) | 2,696,000) | 2,716,900) | |||||
| Current liabilities | 1,032,300) | 966,500) | 886,200) | 799,000) | 893,900) | 846,300) | 873,200) | 746,900) | 902,400) | 775,800) | 697,000) | 646,500) | 876,600) | 1,261,100) | 1,183,200) | 1,314,500) | |||||
| Liquidity Ratio | |||||||||||||||||||||
| Current ratio1 | 3.08 | 3.64 | 3.75 | 3.84 | 3.46 | 3.52 | 3.08 | 3.36 | 3.31 | 3.53 | 3.38 | 3.66 | 2.61 | 2.31 | 2.28 | 2.07 | |||||
| Benchmarks | |||||||||||||||||||||
| Current Ratio, Competitors2 | |||||||||||||||||||||
| Abbott Laboratories | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Elevance Health Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Intuitive Surgical Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Medtronic PLC | 2.65 | 2.10 | 2.16 | 1.87 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| UnitedHealth Group Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q4 2021 Calculation
Current ratio = Current assets ÷ Current liabilities
= 3,180,700 ÷ 1,032,300 = 3.08
2 Click competitor name to see calculations.
- Current Assets
- Current assets demonstrate a fluctuating yet generally increasing trend from March 2018 through December 2021. Initially, values hovered around 2.7 to 2.9 billion US dollars, with a noticeable dip at the end of 2018 to approximately 2.29 billion. This was followed by a recovery and upward movement, peaking above 3.5 billion in the third quarter of 2021 before a slight decline in the last quarter of 2021 to about 3.18 billion. The data indicates a pattern of growth with periodic adjustments, reflecting potentially varying levels of liquidity and asset management over the quarters.
- Current Liabilities
- Current liabilities revealed a clear downward trend in the early periods until the first quarter of 2019, dropping from around 1.31 billion to about 646 million. From mid-2019 onwards, current liabilities have generally increased, rising to over one billion by the fourth quarter of 2021. Several quarters show marked increases, particularly in the last quarters of 2019 and 2021. This pattern suggests increasing short-term obligations, which might be indicative of expanding operations or shifts in working capital financing.
- Current Ratio
- The current ratio consistently demonstrates strong liquidity over the entire period, with values generally above 2, and increasing notably into the range of 3 to 3.8 from early 2019 through 2021. After peaking at 3.84 in the first quarter of 2021, the ratio slightly declined but remained above 3, signaling a solid buffer of current assets relative to current liabilities. The rise in this ratio early in the period coincides with decreasing liabilities and stable to growing assets, reflecting an improvement in short-term financial stability. The subsequent stabilization suggests effective management of working capital despite the increase in liabilities.
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Quick Ratio
Edwards Lifesciences Corp., quick ratio calculation (quarterly data)
| Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||
| Cash and cash equivalents | 862,800) | 1,506,900) | 1,312,800) | 1,174,200) | 1,183,200) | 1,024,000) | 903,500) | 662,900) | 1,179,100) | 1,186,600) | 726,800) | 709,200) | 714,100) | 1,261,300) | 1,226,400) | 1,227,000) | |||||
| Short-term investments | 604,000) | 287,800) | 248,400) | 156,400) | 219,400) | 271,300) | 260,300) | 368,200) | 337,800) | 170,300) | 207,500) | 253,800) | 242,400) | 334,400) | 174,400) | 272,300) | |||||
| Accounts receivable, net of allowances | 582,200) | 600,600) | 640,500) | 586,600) | 514,600) | 549,700) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | |||||
| Other receivables | 82,700) | 63,600) | 59,800) | 77,700) | 88,200) | 122,000) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | |||||
| Accounts and other receivables, net of allowances (legacy) | —) | —) | —) | —) | —) | —) | 567,900) | 585,100) | 599,100) | 570,000) | 609,600) | 578,000) | 537,300) | 530,100) | 520,100) | 446,800) | |||||
| Total quick assets | 2,131,700) | 2,458,900) | 2,261,500) | 1,994,900) | 2,005,400) | 1,967,000) | 1,731,700) | 1,616,200) | 2,116,000) | 1,926,900) | 1,543,900) | 1,541,000) | 1,493,800) | 2,125,800) | 1,920,900) | 1,946,100) | |||||
| Current liabilities | 1,032,300) | 966,500) | 886,200) | 799,000) | 893,900) | 846,300) | 873,200) | 746,900) | 902,400) | 775,800) | 697,000) | 646,500) | 876,600) | 1,261,100) | 1,183,200) | 1,314,500) | |||||
| Liquidity Ratio | |||||||||||||||||||||
| Quick ratio1 | 2.07 | 2.54 | 2.55 | 2.50 | 2.24 | 2.32 | 1.98 | 2.16 | 2.34 | 2.48 | 2.22 | 2.38 | 1.70 | 1.69 | 1.62 | 1.48 | |||||
| Benchmarks | |||||||||||||||||||||
| Quick Ratio, Competitors2 | |||||||||||||||||||||
| Abbott Laboratories | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Elevance Health Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Intuitive Surgical Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Medtronic PLC | 1.91 | 1.58 | 1.63 | 1.37 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| UnitedHealth Group Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q4 2021 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 2,131,700 ÷ 1,032,300 = 2.07
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several key trends regarding liquidity and short-term financial health over the examined periods.
- Total Quick Assets
- This metric showed fluctuations throughout the periods with an initial value of approximately 1.95 billion USD at March 31, 2018. It experienced a notable decline by December 31, 2018, dropping to roughly 1.49 billion USD. After this low point, quick assets began to recover, reaching over 2.1 billion USD by December 31, 2019. However, the onset of 2020 saw another dip in quick assets, down to about 1.62 billion USD by March 31, 2020. Recovery resumed during 2020 and into 2021, with quick assets peaking at approximately 2.46 billion USD in September 2021 before slightly declining to 2.13 billion USD at the end of 2021.
- Current Liabilities
- Current liabilities showed a consistent declining trend from early 2018 into the first quarter of 2019, decreasing from about 1.31 billion USD to 646.5 million USD. This represents a significant reduction in short-term obligations. From mid-2019 onward, current liabilities gradually increased again, reaching just over 1 billion USD by December 31, 2021. The initial reduction and subsequent rise depict a cycle of liability management that aligns with the fluctuations in quick assets.
- Quick Ratio
- The quick ratio followed a generally increasing trend from 1.48 at the beginning of 2018 to a peak of about 2.55 in mid-2021, indicating an improvement in the company's liquidity and its ability to cover current liabilities with quick assets. Notably, there was a sharp increase in the quick ratio during 2019, peaking at 2.48 by September. The ratio slightly declined toward the end of 2021, settling at around 2.07. Despite some volatility, the overall upward movement confirms enhanced liquidity management over the period analyzed.
In summary, the data illustrate a pattern of liquidity enhancement marked by a recovery of quick assets following early declines, a strategic reduction and subsequent increase in current liabilities, and an improvement in the quick ratio that underscores the company's strengthened capacity to meet short-term obligations with liquid resources. The fluctuations observed suggest responsive financial management adapting to varying operational or market conditions over the years.
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Cash Ratio
Edwards Lifesciences Corp., cash ratio calculation (quarterly data)
| Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||
| Cash and cash equivalents | 862,800) | 1,506,900) | 1,312,800) | 1,174,200) | 1,183,200) | 1,024,000) | 903,500) | 662,900) | 1,179,100) | 1,186,600) | 726,800) | 709,200) | 714,100) | 1,261,300) | 1,226,400) | 1,227,000) | |||||
| Short-term investments | 604,000) | 287,800) | 248,400) | 156,400) | 219,400) | 271,300) | 260,300) | 368,200) | 337,800) | 170,300) | 207,500) | 253,800) | 242,400) | 334,400) | 174,400) | 272,300) | |||||
| Total cash assets | 1,466,800) | 1,794,700) | 1,561,200) | 1,330,600) | 1,402,600) | 1,295,300) | 1,163,800) | 1,031,100) | 1,516,900) | 1,356,900) | 934,300) | 963,000) | 956,500) | 1,595,700) | 1,400,800) | 1,499,300) | |||||
| Current liabilities | 1,032,300) | 966,500) | 886,200) | 799,000) | 893,900) | 846,300) | 873,200) | 746,900) | 902,400) | 775,800) | 697,000) | 646,500) | 876,600) | 1,261,100) | 1,183,200) | 1,314,500) | |||||
| Liquidity Ratio | |||||||||||||||||||||
| Cash ratio1 | 1.42 | 1.86 | 1.76 | 1.67 | 1.57 | 1.53 | 1.33 | 1.38 | 1.68 | 1.75 | 1.34 | 1.49 | 1.09 | 1.27 | 1.18 | 1.14 | |||||
| Benchmarks | |||||||||||||||||||||
| Cash Ratio, Competitors2 | |||||||||||||||||||||
| Abbott Laboratories | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Elevance Health Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Intuitive Surgical Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Medtronic PLC | 1.27 | 1.17 | 1.18 | 0.99 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| UnitedHealth Group Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q4 2021 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 1,466,800 ÷ 1,032,300 = 1.42
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals notable trends and fluctuations in total cash assets, current liabilities, and the cash ratio over the observed periods.
- Total Cash Assets
- Total cash assets demonstrated considerable variability throughout the quarters. Initially, the assets showed an upward trend, rising from approximately $1.5 billion in early 2018 to a peak near $1.6 billion by the third quarter of 2018. This was followed by a sharp decrease in the fourth quarter of 2018, reaching below $1 billion. Subsequently, total cash assets experienced cyclical fluctuations, rising again into the first quarter of 2021 with a peak of around $1.79 billion in the third quarter before declining to approximately $1.47 billion by the end of 2021. Overall, the trend suggests episodes of substantial liquidity accumulation interspersed with periods of reduction, reflecting dynamic cash management possibly in response to operational and investment activities.
- Current Liabilities
- Current liabilities displayed a generally downward trend from early 2018 to the first quarter of 2019, decreasing from about $1.31 billion to $646.5 million. After this trough, current liabilities increased steadily, punctuated by occasional fluctuations, climbing to about $902.4 million by the end of 2019. Through 2020 and 2021, liabilities continued to escalate, reaching approximately $1.03 billion by the last quarter of 2021. This progression indicates a growing short-term financial obligation load in recent years, which may be linked to increased operational expenditures or financing activities.
- Cash Ratio
- The cash ratio, representing the capacity to cover current liabilities with cash and cash equivalents, exhibited significant variation. In 2018, the ratio hovered close to 1.1 to 1.3, indicating a generally balanced liquidity position. The ratio spiked notably in 2019, peaking at 1.75 in the third quarter and maintaining high levels above 1.5 for much of the year, implying a stronger liquidity buffer. During 2020 and 2021, the ratio largely remained elevated, achieving a high of 1.86 in the third quarter of 2021 before moderating to 1.42 by year-end. The persistently robust cash ratio suggests a conservative liquidity stance, ensuring that cash holdings were sufficient to meet current liabilities comfortably during most periods.
In summary, the financial data points to a pattern of prudent liquidity management with cash assets and liquidity ratios rising and falling in correspondence with shifting current liabilities. Despite fluctuations, the overall position reflects a strong ability to meet short-term obligations, with some quarters demonstrating particularly high liquidity cushions. The increasing trend in current liabilities coupled with maintained or growing cash reserves highlights a cautious approach to balancing liabilities and cash availability over the observed timeframe.
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