Johnson & Johnson (NYSE:JNJ)

The analysis of the liquidity ratios over multiple quarters reveals fluctuating trends in the company's short-term financial health.

Current ratio

The current ratio shows moderate variation over the periods observed. Early values range between approximately 1.28 and 1.43, indicating a relatively stable ability to cover current liabilities with current assets throughout most of 2021 and 2022. A notable decline occurs in December 2022, dropping sharply to 0.99, signaling a reduced liquidity position. This ratio partly recovers in subsequent quarters, rising back to around 1.26 by March 2025, though with some oscillation. Overall, the current ratio maintains levels slightly above 1 on average, suggesting a generally balanced but cautious liquidity posture.

Quick ratio

The quick ratio follows a broadly similar pattern to the current ratio but at somewhat lower levels, consistent with its exclusion of inventory from liquid assets. It remains above 1.00 during the initial quarters from April 2021 through October 2022, indicating a strong liquid asset coverage relative to current liabilities. However, a significant decline occurs at the end of 2022 to 0.71, matching the pattern observed in the current ratio's drop. Subsequent quarters show marginal recovery, though the ratio remains below 1 in most periods after that, reaching however as high as 0.96 by March 2025. This suggests a more conservative liquidity buffer after late 2022 with potential pressure on very liquid assets.

Cash ratio

The cash ratio illustrates a more pronounced volatility and generally decreasing trend compared to the other liquidity measures. Starting around 0.6 to 0.75 in the first three quarters through October 2022, it experiences a substantial drop in December 2022 to 0.42. Following this, the ratio fluctuates between approximately 0.35 and 0.68, frequently falling under 0.5 from late 2023 onward. The continued low cash ratio levels highlight relatively diminished availability of cash and cash equivalents to cover current liabilities, emphasizing potential liquidity constraints in immediate cash terms.

In summary, the liquidity ratios collectively indicate a stable and sufficient liquidity position up to late 2022, after which a significant reduction across all ratios is evident. The company’s ability to meet short-term obligations from liquid assets declines notably during the final quarter of 2022 and, despite partial recoveries, remains somewhat constrained through mid-2025. This trend points to increased reliance on less liquid current assets or increased current liabilities influencing liquidity. Careful monitoring of cash and near-cash assets is advised to mitigate any short-term financial stress.

Current Assets

Current assets exhibited a generally fluctuating trend over the observed quarters. Initially, there was a consistent increase from approximately 52.5 billion USD to about 65.2 billion USD by October 2022, followed by a significant decline to around 53.5 billion USD by December 2023. Subsequently, the values stabilized in the range of approximately 53 billion to 57.8 billion USD, with a notable sharp rise to 71.5 billion USD observed in March 2025, before declining again to approximately 54.6 billion USD by September 2025.

Current Liabilities

Current liabilities showed an increasing trend with some volatility. Starting at about 40.9 billion USD, the liabilities slightly decreased in mid-2021 but then climbed to a peak of approximately 55.8 billion USD by December 2022. Following this peak, liabilities fluctuated between roughly 44.3 billion and 54 billion USD through 2023 and the first half of 2024. The later quarters observed a rise, peaking at nearly 57 billion USD by March 2025, before moderating back to approximately 50.9 billion USD towards September 2025.

Current Ratio

The current ratio initially exhibited stability, maintaining levels above 1.28 and reaching a high point of 1.43 in October 2022. However, a sharp decline to below 1.0 (specifically 0.99) was observed by December 2022, indicating a potential liquidity concern at that time. After this low, the ratio gradually improved, stabilizing between 1.03 and 1.26 over the subsequent quarters. By late 2025, the ratio fluctuated slightly but remained close to or just above 1.0, implying marginally sufficient short-term liquidity throughout most periods.

Overall Insights

The financial data illustrate periods of considerable fluctuation in both current assets and liabilities, influencing the company’s liquidity position as reflected in the current ratio. The peak and subsequent sharp dips in current assets and liabilities during late 2022 suggest episodic changes in working capital management or operational cycles. The current ratio's drop below 1.0 during this period signals potential short-term liquidity stress, which was followed by improvement in subsequent quarters. Despite volatility, the company generally maintained a current ratio around or above 1.0, indicating an overall capacity to meet short-term obligations, though with some periods of tighter liquidity conditions.

Total Quick Assets

The level of total quick assets exhibited moderate fluctuations over the observed periods. Starting at approximately 39,557 million USD, the value increased steadily until reaching close to 49,969 million USD by late 2022. However, a significant decline occurred at the end of 2022, dropping to 39,679 million USD. Following this drop, quick assets recovered and peaked at 54,801 million USD by early 2025, before decreasing again to around 36,173 million USD toward the latest period. The pattern suggests volatility with intermittent peaks and troughs in quick asset availability.

Current Liabilities

Current liabilities demonstrated an overall increasing trend with certain periods of sharper increases and minor declines. Starting near 40,932 million USD, liabilities grew moderately through 2021 and 2022, culminating in a steep rise to over 60,373 million USD by early 2023. Thereafter, liabilities showed a tendency to stabilize and slightly decrease while remaining elevated, fluctuating between roughly 50,000 and 57,000 million USD during the latter periods. The data indicates growing short-term obligations with some stabilization at higher levels.

Quick Ratio

The quick ratio initially remained close to or slightly above 1.0 during 2021 and most of 2022, indicating a relatively stable liquidity position and that quick assets were roughly sufficient to cover current liabilities. However, a marked decline was observed starting at the end of 2022, dropping below 1.0 to as low as 0.68 by late 2025. This decline signals a weakening liquidity position, suggesting that quick assets increasingly cover a smaller portion of current liabilities. Occasional minor recoveries did not restore the ratio to its prior levels, pointing to potential liquidity risk concerns over time.

Overall Analysis

The financial data reflect a liquidity profile that experienced initial stability followed by increased volatility and pressure. Although total quick assets occasionally increased to high levels, these were outpaced by rising current liabilities, leading to a diminishing quick ratio. The decreasing quick ratio below 1.0 in the later periods highlights a reduction in immediate liquidity buffer, which may warrant attention to ensure sufficient short-term financial flexibility. The company's ability to manage and align quick assets with growing short-term liabilities will likely be critical going forward.

The analysis of the financial data over the specified periods reveals notable fluctuations and trends in the company's liquidity position and short-term obligations.

Total cash assets

The total cash assets generally experienced growth from early 2021 through the third quarter of 2022, peaking at 34,079 million USD in October 2022. However, a sharp decline followed in December 2022, dropping to 23,519 million USD. This was followed by a period of moderate volatility, including a rebound to 38,781 million USD in March 2025, which represents the highest cash level in the dataset. The most recent quarters show a significant decrease back below 20,000 million USD.

Current liabilities

Current liabilities were on an increasing trajectory overall, starting at 40,932 million USD in April 2021 and rising steadily with intermittent fluctuations. There was a pronounced increase toward the end of 2022 and in early 2023, with values reaching above 60,000 million USD in April 2023. After that peak, liabilities decreased somewhat but remained elevated relative to the start of the period. The data from late 2024 through mid-2025 shows a relatively stable but high level of current liabilities, fluctuating around the 50,000 to 54,000 million USD range.

Cash ratio

The cash ratio, a key liquidity metric comparing cash assets to current liabilities, showed an improvement from 0.60 in April 2021 to a peak of 0.75 in October 2022, indicating better short-term liquidity during this period. This was followed by a pronounced decline from late 2022, with the ratio dropping sharply to as low as 0.35 in September 2025. The lowest observed ratios correspond to periods of high current liabilities coupled with reduced cash assets. The pattern indicates a weakening liquidity position toward the most recent periods.

In summary, the company exhibited strong liquidity and cash asset growth through most of 2021 and 2022, culminating in a high cash ratio. However, starting in late 2022, there were notable declines in cash assets and cash ratio, alongside an increase in current liabilities, which persisted into 2023 and beyond. This trend suggests growing pressure on the company's ability to cover short-term obligations with readily available cash, requiring attention to liquidity management in the forthcoming quarters.