Johnson & Johnson (NYSE:JNJ)

The liquidity position, as indicated by the current, quick, and cash ratios, exhibits fluctuations over the observed period. A general trend of decreasing liquidity is apparent from the earlier quarters through the end of 2023, followed by some recovery in early 2024, and then a renewed decline through the end of the observation period.

Current Ratio

The current ratio began at 1.39 and increased modestly to 1.43 before experiencing a significant decrease to 0.99 by December 31, 2022. It recovered somewhat to 1.21 by October 1, 2023, but then decreased again to 1.03 by September 29, 2024. The most recent observation, December 28, 2025, shows a value of 1.03, indicating a stabilization at a lower level than the initial period. This suggests a potential tightening of short-term asset coverage of short-term liabilities.

Quick Ratio

The quick ratio follows a similar pattern to the current ratio, starting at 1.06 and peaking at 1.10. A substantial decline is observed, reaching 0.71 by the end of 2022. While there is some improvement to 0.86 by October 1, 2023, the ratio subsequently decreases to 0.70 by September 29, 2024, and further to 0.69 by December 28, 2025. This indicates a consistent reduction in the ability to meet short-term obligations with the most liquid assets, excluding inventory.

Cash Ratio

The cash ratio demonstrates the most pronounced decline. Beginning at 0.70, it decreases steadily to 0.42 by December 31, 2022. Although it experiences a slight increase to 0.54 in April 2023, it generally trends downward, reaching 0.37 by December 28, 2025. This suggests a diminishing capacity to cover immediate liabilities with cash and cash equivalents. The ratio’s decline is more consistent than the other two liquidity measures.

Overall Trend

The consistent decline in all three liquidity ratios, particularly the cash ratio, suggests a potential increase in reliance on less liquid assets or increased short-term obligations. The slight recoveries observed in 2023 and early 2024 were not sustained, and the ratios have generally continued to decrease. This warrants further investigation into the underlying causes, such as changes in working capital management, debt levels, or asset utilization.

The current ratio exhibited fluctuations over the analyzed period, spanning from April 2022 to December 2025. Initially, the ratio demonstrated a slight increasing trend, followed by a notable decline, and then a period of relative stabilization with some subsequent variation.

Initial Trend (Apr 3, 2022 – Oct 2, 2022)

The current ratio began at 1.39 and increased steadily to reach a peak of 1.43 in October 2022. This suggests a strengthening of the company’s short-term liquidity position during this timeframe, indicating an increasing ability to cover current liabilities with current assets.

Significant Decline (Dec 31, 2022 – Oct 1, 2023)

A substantial decrease in the current ratio was observed from December 2022 through October 2023. The ratio fell from 0.99 to 1.21. The most significant drop occurred between December 2022 and April 2023, falling to 1.07. This indicates a weakening in the company’s ability to meet its short-term obligations, potentially due to a faster increase in current liabilities compared to current assets, or a decrease in current assets.

Stabilization and Variation (Oct 1, 2023 – Dec 28, 2025)

Following the decline, the current ratio experienced a period of relative stabilization, fluctuating between 1.03 and 1.26. A peak of 1.26 was reached in March 2025, followed by a decline to 1.03 by December 2025. This suggests that while the company regained some liquidity, it remained susceptible to short-term financial pressures. The fluctuations indicate ongoing changes in the balance between current assets and current liabilities.

Overall, the current ratio demonstrates a cyclical pattern. While initially healthy, the company experienced a period of reduced liquidity before stabilizing, albeit at a lower level than the initial values. The most recent data point, December 2025, shows a ratio of 1.03, which, while above 1.0, suggests a relatively constrained short-term liquidity position.

The quick ratio exhibited fluctuations over the analyzed period, spanning from April 2022 to December 2025. Initially, the ratio demonstrated a slight upward trend, followed by a significant decline and subsequent stabilization with some volatility. A general observation suggests a weakening in the company’s ability to meet its short-term obligations using its most liquid assets, although recent periods show some improvement.

Initial Trend (Apr 2022 – Oct 2022)

The quick ratio began at 1.06 and increased to 1.10 over the first three quarters of the period. This indicates a strengthening of the company’s ability to cover its current liabilities with highly liquid assets during this timeframe. Both total quick assets and current liabilities increased, but quick assets grew at a slightly faster rate.

Significant Decline (Dec 2022 – Jun 2023)

A substantial decrease in the quick ratio was observed from 0.71 in December 2022 to 0.84 in July 2023. This decline was primarily driven by a more rapid increase in current liabilities compared to the growth of quick assets. Total quick assets decreased significantly in December 2022, contributing to the ratio’s drop.

Stabilization and Volatility (Jul 2023 – Jun 2025)

Following the decline, the quick ratio fluctuated between 0.68 and 0.96. While there wasn’t a clear upward or downward trend, the ratio remained generally below the levels seen in the earlier part of the analyzed period. A low of 0.68 was recorded in June 2025, followed by a slight recovery to 0.69 in September 2025 and 0.69 in December 2025. This suggests ongoing challenges in maintaining a strong short-term liquidity position, but also indicates some potential for stabilization.

Recent Performance (Sep 2024 – Dec 2025)

The most recent four quarters show a quick ratio ranging from 0.70 to 0.78, with a slight upward movement in the final quarter. This suggests a potential, albeit modest, improvement in the company’s short-term liquidity position towards the end of the analyzed period. However, the ratio remains below 1.0, indicating that the company does not have a dollar of quick assets for every dollar of current liabilities.

Overall, the quick ratio demonstrates a period of initial strength followed by a notable weakening and subsequent stabilization with continued volatility. The company’s ability to meet short-term obligations with its most liquid assets has been inconsistent over the analyzed timeframe, requiring continued monitoring.

The cash ratio exhibited fluctuations over the observed period, generally indicating a moderate ability to meet current liabilities with immediately available cash. An initial upward trend was followed by a significant decline, then a period of relative stability before another decrease, and a final recovery.

Overall Trend

From April 2022 to October 2022, the cash ratio increased from 0.70 to 0.75, suggesting improving short-term liquidity. However, a substantial decrease occurred by December 2022, falling to 0.42. The ratio remained relatively stable between 0.50 and 0.54 through the first three quarters of 2023. A further decline to 0.39 was noted in September 2024, before recovering to 0.49 by December 2024, and then increasing to 0.68 in March 2025. The ratio then decreased again to 0.35 in June 2025, followed by slight increases to 0.36 and 0.37 in subsequent quarters, ending at 0.37 in December 2025.

Peak and Trough Values

The highest cash ratio recorded during the period was 0.75 in October 2022. Conversely, the lowest value was 0.35 in June 2025. This represents a significant range, indicating considerable variability in the company’s immediate liquidity position.

Cash Asset Movement

Total cash assets increased from US$30,388 million in April 2022 to US$34,079 million in October 2022, aligning with the initial increase in the cash ratio. A substantial decrease to US$23,519 million was observed by December 2022, coinciding with the ratio’s decline. Cash assets fluctuated throughout 2023 and 2024, with a peak of US$38,781 million in March 2025, before decreasing to US$20,102 million by December 2025.

Current Liability Movement

Current liabilities generally increased over the period, rising from US$43,390 million in April 2022 to US$55,802 million in December 2022. They continued to fluctuate, peaking at US$60,373 million in April 2023, and ending at US$54,126 million in December 2025. The increase in current liabilities contributed to the decrease in the cash ratio, particularly evident in late 2022 and early 2023.

The observed fluctuations suggest that the company’s short-term liquidity is sensitive to changes in both cash holdings and current obligations. The significant drop in the cash ratio in late 2022 and mid-2025 warrants further investigation to understand the underlying causes and potential implications for the company’s financial health.