Johnson & Johnson (NYSE:JNJ)

Current Ratio

The current ratio exhibits fluctuations throughout the observed periods, with values generally staying above 1, indicating an overall ability to cover short-term liabilities with current assets. Starting at 1.31 in early 2020, the ratio increased to a peak of 1.48 in September 2020, suggesting strengthened liquidity at that time. However, a notable decline occurs by December 2022 where the ratio drops to 0.99, dipping below the threshold of 1 and potentially signaling a tighter liquidity position. Subsequently, the ratio recovers steadily, reaching 1.26 by March 2025. This pattern reflects periods of both liquidity strengthening and weakening, with a recovery trend in the most recent quarters.

Quick Ratio

The quick ratio also shows variability, mirroring some aspects of the current ratio but consistently reflecting a more conservative measure of liquidity by excluding inventory. It began at 0.98 in March 2020 and peaked at 1.17 in September 2020, emphasizing improved ability to meet immediate liabilities without relying on inventory. A significant drop is observed in December 2022 to 0.71, indicating diminished quick liquidity in that period. Following this, a gradual increase occurs, culminating in 0.96 by March 2025. This trend suggests the company experienced some liquidity pressure mid-cycle but worked toward reinforcing its quick asset base towards the end of the timeline.

Cash Ratio

The cash ratio reveals a more pronounced decline over the analyzed intervals, signaling changes in the most liquid assets relative to current liabilities. Initially recorded at 0.54 in March 2020, it increased to 0.79 by September 2020, indicating stronger cash and cash equivalents coverage. After maintaining around 0.7 during much of 2021 and early 2022, a substantial decrease occurs by December 2022 to 0.42, the lowest point observed. This reduction suggests a significant drop in cash reserves or increase in short-term liabilities. While some recovery is noted afterward, the ratio remains relatively lower compared to earlier periods, finishing at 0.68 in March 2025. This indicates fluctuating cash availability with a mid-term trough and partial restoration in recent quarters.

Overall Insights

The liquidity ratios collectively highlight an initial period of strengthening liquidity in 2020, followed by a phase of tightening beginning around late 2022. The current and quick ratios both reflect this pattern through their declines and subsequent recoveries, indicating cyclical changes in the company’s short-term financial health. The cash ratio shows a more volatile behavior with a deeper dip and slower recovery, suggesting that cash reserves are a key area of concern during the contraction phase. The persistent recovery in all three ratios toward the end of the timeline denotes improving liquidity conditions but with levels that have yet to consistently exceed those seen at the start of the period.

The analysis of the quarterly financial data reveals several notable trends relating to current assets, current liabilities, and the current ratio over the observed periods.

Current Assets

Current assets demonstrate overall growth with fluctuations across the quarters. Starting at 44,226 million USD in March 2020, the value increased substantially to a peak of 71,551 million USD by March 2025. Despite some periods of decline, such as from July 2022 to December 2022 and in the first quarter of 2024, the long-term trend shows a rising asset base.

Current Liabilities

Current liabilities also trend upwards over the period but with more variability. Beginning at 33,689 million USD in March 2020, liabilities increased sharply to 60,373 million USD by April 2023, followed by some decreases and fluctuations. By March 2025, liabilities rose again to 56,903 million USD. This indicates growing obligations but with some periods of tightening or repayment.

Current Ratio

The current ratio varies over the analyzed quarters, reflecting changes in liquidity. Initially, the ratio was relatively stable around 1.3 to 1.4, indicating a comfortable coverage of current liabilities by current assets. However, a significant dip occurred in December 2022 when the ratio dropped to 0.99, suggesting potential short-term liquidity stress. Subsequently, the ratio recovered gradually to reach 1.26 by March 2025, still slightly lower compared to earlier periods. This recovery indicates improvement in managing short-term obligations relative to assets after a period of increased pressure.

In summary, the company has expanded its current asset base consistently over five years, with current liabilities increasing as well but with more pronounced oscillations. The current ratio reflects these dynamics, displaying temporary liquidity constraints followed by a restoration of stronger short-term financial health. Monitoring these trends will be important to ensure continued balance between growth in assets and liabilities and maintaining adequate liquidity levels.

The analysis of the quarterly financial data reveals several notable trends related to liquidity and short-term financial stability over the observed periods.

Total Quick Assets

The total quick assets showed a fluctuating trend over the quarters. Initially, quick assets increased from approximately 32,898 million USD to a peak of about 49,969 million USD in the final quarter of 2022. However, a significant decline is observed thereafter, with values dropping to around 38,309 million USD by the fourth quarter of 2023. Following this decline, quick assets modestly recovered towards the end of the observation period, rising sharply to 54,801 million USD by the first quarter of 2025. This pattern indicates variability in liquid assets with a strong rebound in the most recent quarter.

Current Liabilities

Current liabilities consistently rose over the period with some fluctuations. Starting at around 33,689 million USD in the first quarter of 2020, liabilities increased steadily, surpassing 55,802 million USD by the end of 2022. A significant increase is noted at this point, with liabilities remaining elevated around the 50,000 to 60,000 million USD range through to the first quarter of 2025, where it peaked at 56,903 million USD. The rising liability trend suggests an increased level of short-term obligations for the company.

Quick Ratio

The quick ratio reflects the company's ability to cover current liabilities with its most liquid assets. Initially, the ratio fluctuated around the 0.9 to 1.17 range, with a notable peak at 1.17 in September 2020, indicating sufficient liquid assets relative to liabilities. From late 2022 through much of 2024, the quick ratio experienced a marked decline, reaching its lowest points between 0.7 and 0.78, indicating a period of reduced liquidity and a potential strain on meeting short-term obligations. However, the ratio improved to 0.96 by March 2025, suggesting a recovery in liquidity position despite prevailing high liabilities.

Overall, the data reflects a period marked by increasing current liabilities and fluctuating quick assets, which collectively caused the quick ratio to decline notably during 2023 and 2024. The recent improvement in quick assets and the quick ratio toward early 2025 may indicate efforts to enhance liquidity or improved operational cash flows, improving the short-term financial stability of the company.

Total cash assets

Total cash assets demonstrate significant fluctuations over the observed periods. Initially, there is a steady increase from approximately 18,024 million US dollars in the first quarter of 2020 to a peak around 31,001 million by the third quarter of 2021. This is followed by some volatility, with notable declines in late 2022 and early 2023 dropping to around 23,519 million US dollars, before a recovery back to a high of 38,781 million by the first quarter of 2025.

The general pattern indicates a capacity to replenish cash reserves after periods of drawdowns, suggesting active cash management to balance liquidity needs.

Current liabilities

Current liabilities exhibit an upward trend throughout the timeline, rising from about 33,689 million US dollars in the first quarter of 2020 to nearly 56,903 million by the first quarter of 2025. There are periodic accelerations in the increase, particularly evident in late 2022 and early 2023, where liabilities spike from roughly 45,543 million to over 60,373 million.

This persistent increase in current liabilities may signal growing short-term financial obligations that could affect liquidity if not matched by corresponding increases in cash or liquid assets.

Cash ratio

The cash ratio, which measures the ability to cover current liabilities with cash assets, shows variability aligned with changes in cash and liabilities. Starting at 0.54 early in 2020, it peaks at 0.79 in the third quarter of 2020, reflecting enhanced liquidity. However, from late 2022 to mid-2024, the ratio declines to as low as 0.39, indicating a reduction in the relative cash cushion.

Towards the end of the series, there is a partial recovery to 0.68 by the first quarter of 2025. This suggests that while the company experienced tighter liquidity positions during some periods, it has taken steps to improve cash adequacy relative to current liabilities subsequently.