Eli Lilly & Co. (NYSE:LLY)

The liquidity position, as indicated by the presented ratios, demonstrates fluctuating performance over the five-year period. A general trend of initial decline followed by improvement is observable across all measured ratios. The period between 2021 and 2023 shows weakening liquidity, while 2024 and 2025 exhibit signs of strengthening.

Current Ratio

The current ratio decreased from 1.23 in 2021 to a low of 0.94 in 2023, suggesting a diminishing ability to cover short-term liabilities with short-term assets. However, the ratio rebounded to 1.15 in 2024 and further increased to 1.58 in 2025, indicating improved short-term solvency. This recovery suggests positive changes in the composition of current assets or current liabilities.

Quick Ratio

The quick ratio followed a similar pattern to the current ratio, declining from 0.79 in 2021 to 0.52 in 2023. This indicates a weakening ability to meet short-term obligations with the most liquid assets. The quick ratio then increased to 0.58 in 2024 and 0.78 in 2025, mirroring the improvement seen in the current ratio, though remaining below the 2021 level. The increase suggests improved liquidity excluding inventory.

Cash Ratio

The cash ratio experienced the most pronounced decline, falling from 0.25 in 2021 to 0.10 in 2023. This signifies a substantial reduction in the proportion of current assets held as cash. A slight recovery was observed in 2024, remaining at 0.12, followed by a more notable increase to 0.21 in 2025. This suggests a rebuilding of cash reserves towards the end of the period.

Overall, the observed trends suggest a period of liquidity challenges between 2021 and 2023, followed by a recovery and strengthening of the liquidity position in 2024 and 2025. The increasing ratios across all measures indicate a positive shift in the company’s ability to meet its short-term obligations.

The current ratio exhibited fluctuations over the five-year period. Initially, the ratio decreased before recovering and ultimately demonstrating substantial growth.

Current Ratio Trend

The current ratio began at 1.23 in 2021, indicating the company possessed $1.23 of current assets for every $1.00 of current liabilities. A decline was observed in 2022, with the ratio falling to 1.05. This downward trend continued into 2023, reaching a low of 0.94, suggesting a potential weakening in short-term liquidity. However, the ratio began to improve in 2024, rising to 1.15, and experienced significant growth in 2025, reaching 1.58. This represents a substantial increase in the company’s ability to cover its short-term obligations with its current assets.

The increase in the current ratio in the later years is attributable to a faster rate of growth in current assets compared to current liabilities. While both current assets and current liabilities increased throughout the period, the acceleration in current asset growth, particularly in 2025, drove the improvement in the ratio.

Asset and Liability Changes

Current assets increased from US$18,452 million in 2021 to US$55,629 million in 2025. Current liabilities also increased, moving from US$15,053 million in 2021 to US$35,228 million in 2025. The relative increase in current assets, especially in the final two years, is the primary driver of the observed improvement in the current ratio.

The movement in the current ratio suggests a changing liquidity position. The initial decline raised potential concerns, but the subsequent recovery and strong growth indicate improved short-term financial health.

The quick ratio exhibited fluctuations over the five-year period. Initially, the ratio decreased before stabilizing and then increasing again. A review of the underlying components, total quick assets and current liabilities, provides further insight into these movements.

Overall Trend

The quick ratio began at 0.79 in 2021, declined to a low of 0.52 in 2023, and then showed improvement, reaching 0.78 in 2025. This indicates a period of weakening short-term liquidity followed by a recovery.

Quick Ratio Decline (2021-2023)

The decrease in the quick ratio from 2021 to 2023 was primarily driven by a faster growth rate in current liabilities compared to total quick assets. While quick assets decreased from 2021 to 2022, they increased in subsequent years. However, current liabilities consistently increased throughout the entire period, outpacing the growth in quick assets until 2025.

Quick Ratio Stabilization and Improvement (2023-2025)

From 2023 to 2025, the quick ratio began to recover. This was due to a significant increase in total quick assets, rising from US$14,155 million to US$27,423 million. Although current liabilities continued to increase, the rate of increase slowed, allowing quick assets to catch up and improve the ratio.

Component Analysis

Total quick assets demonstrated a substantial increase in the later years of the period, suggesting improved liquidity in terms of readily convertible assets. Current liabilities consistently increased, indicating growing short-term obligations. The interplay between these two components determined the overall trend in the quick ratio.

The observed fluctuations in the quick ratio suggest changes in the company’s short-term financial position. The recovery in 2024 and 2025 is a positive sign, but continued monitoring of both quick assets and current liabilities is warranted.

The cash ratio exhibited fluctuations over the five-year period. Initially, the ratio decreased before stabilizing and then increasing again. Total cash assets and current liabilities both experienced changes throughout the period, influencing the cash ratio’s trajectory.

Cash Ratio Trend

The cash ratio began at 0.25 in 2021, indicating the company held 25 cents of cash for every dollar of current liabilities. A significant decline was observed in 2022, with the ratio falling to 0.12. This downward trend continued into 2023, reaching a low of 0.10. The ratio remained relatively stable in 2024 at 0.12 before increasing to 0.21 in 2025.

Total Cash Assets

Total cash assets decreased from US$3,819 million in 2021 to US$2,067 million in 2022. A partial recovery occurred in 2023, with cash assets rising to US$2,819 million. Further increases were noted in 2024 (US$3,268 million) and a substantial increase in 2025, reaching US$7,268 million.

Current Liabilities

Current liabilities demonstrated a consistent upward trend throughout the period. Starting at US$15,053 million in 2021, they increased to US$17,138 million in 2022. This growth continued in subsequent years, reaching US$27,293 million in 2023, US$28,377 million in 2024, and US$35,228 million in 2025.

The initial decline in the cash ratio from 2021 to 2023 was likely driven by a combination of decreasing cash assets and increasing current liabilities. The stabilization in 2024 suggests a potential balance between these two factors. The substantial increase in the cash ratio in 2025 is attributable to the significant growth in total cash assets, outpacing the increase in current liabilities.