Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
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Liquidity Ratios (Summary)
Johnson & Johnson, liquidity ratios
| Dec 29, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Current ratio | ||||||
| Quick ratio | ||||||
| Cash ratio |
Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Current Ratio
- The current ratio exhibited a fluctuating trend over the observed periods. It increased from 1.21 in 2020 to 1.35 in 2021, indicating an improvement in short-term liquidity. However, it declined sharply to 0.99 in 2022, falling below the threshold of 1, which may suggest tighter liquidity conditions during that year. In the subsequent years, it showed a recovery to 1.16 in 2023 and then a slight decrease to 1.11 in 2024. Overall, the current ratio suggests some variability in the company's ability to cover current liabilities with current assets, with a dip in 2022 and partial recovery afterward.
- Quick Ratio
- The quick ratio also followed a similar fluctuating pattern. It rose from 0.91 in 2020 to 1.04 in 2021, indicating increased liquidity with more liquid assets to cover current liabilities. However, it declined markedly to 0.71 in 2022, reflecting a reduction in liquid asset coverage of current liabilities. During 2023 and 2024, the ratio showed a modest upward movement to 0.82 and then a slight decrease to 0.78, respectively. This suggests that the company's near-cash liquidity weakened significantly in 2022 and only partially recovered thereafter.
- Cash Ratio
- The cash ratio demonstrated a generally declining trend after 2021. It increased from 0.59 in 2020 to 0.70 in 2021, showing an improved position in terms of cash and cash equivalents relative to current liabilities. Nonetheless, this ratio dropped considerably to 0.42 in 2022 and experienced a minor recovery to 0.50 in 2023, followed by a slight decline to 0.49 in 2024. The declining cash ratio indicates reduced availability of the most liquid assets to meet short-term obligations, with minimal improvement in the later years.
- Summary
- Overall, the liquidity ratios reflect a peak in short-term financial strength in 2021, followed by a significant decline across all measures in 2022. Subsequent years show some recovery, though none of the ratios return to their 2021 highs. This pattern may signal challenges in maintaining liquidity levels post-2021, potentially necessitating closer monitoring of working capital management and cash reserves.
Current Ratio
Johnson & Johnson, current ratio calculation, comparison to benchmarks
| Dec 29, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Current ratio1 | ||||||
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
| Current Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| Current Ratio, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- The current assets exhibited a fluctuating trend over the five-year period. Beginning at 51,237 million US dollars in 2020, there was an increase to 60,979 million in 2021. Subsequently, the value declined to 55,294 million in 2022 and continued to decrease slightly to 53,495 million in 2023. In 2024, current assets increased again to 55,893 million US dollars, indicating some recovery after the previous declines.
- Current Liabilities
- Current liabilities showed a consistent upward movement each year except for a dip observed in 2023. Starting from 42,493 million US dollars in 2020, current liabilities rose to 45,226 million in 2021 and then surged significantly to 55,802 million in 2022. However, in 2023, current liabilities decreased to 46,282 million before rising again to 50,321 million in 2024. This pattern suggests volatility with a notable peak in 2022 followed by partial correction.
- Current Ratio
- The current ratio, which measures liquidity, reflected changes correlating with the dynamics of current assets and liabilities. The ratio improved from 1.21 in 2020 to 1.35 in 2021, indicating stronger short-term financial health. In 2022, the ratio fell below 1 to 0.99, suggesting potential liquidity concerns as current liabilities surpassed current assets. In 2023, the ratio rebounded to 1.16, and slightly decreased in 2024 to 1.11, signifying an overall recovery in liquidity but remaining less robust than the peak in 2021.
- Summary
- The data reveal that the company's short-term financial position faced some pressure in 2022, marked by a substantial rise in current liabilities and a drop in the current ratio below 1. The fluctuations in current assets and liabilities indicate variability in working capital management. Despite this, the liquidity position improved after 2022 but has not returned to the previous high levels observed in 2021, suggesting cautious monitoring of liquidity is warranted going forward.
Quick Ratio
Johnson & Johnson, quick ratio calculation, comparison to benchmarks
| Dec 29, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | ||||||
| Marketable securities | ||||||
| Accounts receivable trade, less allowances | ||||||
| Total quick assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Quick ratio1 | ||||||
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
| Quick Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| Quick Ratio, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Quick Assets Trend
- The total quick assets showed an increase from 38,761 million US dollars at the end of 2020 to a peak of 46,891 million US dollars in 2021. Following this peak, the quick assets declined significantly to 39,679 million US dollars in 2022 and continued to experience slight decreases and fluctuations through 2023 and 2024, ending at 39,364 million US dollars. This indicates a period of volatility with a general reduction after the 2021 high.
- Current Liabilities Trend
- Current liabilities increased consistently over the observed period, beginning at 42,493 million US dollars in 2020 and rising steadily each year to 50,321 million US dollars by 2024. Notably, there was a sharper increase in 2022 reaching 55,802 million US dollars before a decline back down to 46,282 million US dollars in 2023, followed by another increase in 2024. This suggests growing short-term obligations with some variability.
- Quick Ratio Analysis
- The quick ratio, which measures liquidity by comparing quick assets to current liabilities, illustrates a fluctuating trend. Starting below 1 at 0.91 in 2020, it improved to above 1.0 (1.04) in 2021, indicating improved liquidity. However, this trend reversed in subsequent years, with the ratio falling significantly to 0.71 in 2022, and then partially recovering to 0.82 in 2023 before declining again to 0.78 in 2024. The consistent dip below 1 indicates potential liquidity concerns, suggesting that quick assets may be insufficient to cover current liabilities in some years.
- Summary of Liquidity Position
- Overall, the data shows an initial strengthening of the liquidity position in 2021, driven by an increase in quick assets and a moderate level of current liabilities. However, from 2022 onwards, the liquidity position appears to weaken due to decreasing quick assets combined with rising current liabilities, reflected in a declining quick ratio. This pattern implies increased pressure on the company's ability to meet short-term obligations with the most liquid assets.
Cash Ratio
Johnson & Johnson, cash ratio calculation, comparison to benchmarks
| Dec 29, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | ||||||
| Marketable securities | ||||||
| Total cash assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Cash ratio1 | ||||||
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
| Cash Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| Cash Ratio, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total cash assets
- The total cash assets showed an initial increase from 25,185 million US dollars in 2020 to a peak of 31,608 million US dollars in 2021. This was followed by a notable decline in 2022 down to 23,519 million US dollars. The subsequent years, 2023 and 2024, reflected relatively stable cash assets around 22,927 and 24,522 million US dollars, respectively, indicating a slight recovery but not reaching the previous peak of 2021.
- Current liabilities
- Current liabilities displayed an upward trend over the period analyzed. Starting from 42,493 million US dollars in 2020, liabilities increased steadily, reaching 45,226 million in 2021. A significant jump occurred in 2022, with liabilities rising to 55,802 million US dollars. This was followed by a reduction in 2023 to 46,282 million, before increasing again in 2024 to 50,321 million dollars. Overall, current liabilities demonstrated volatility but with a general tendency to increase.
- Cash ratio
- The cash ratio, representing the liquidity position in terms of cash assets relative to current liabilities, exhibited considerable fluctuation. It increased from 0.59 in 2020 to 0.7 in 2021, reflecting an improvement in liquidity. However, the ratio declined sharply in 2022 to 0.42, corresponding with the increase in liabilities and the reduction in cash assets. Modest recovery was noted in 2023 with a ratio of 0.5, followed by a slight decrease to 0.49 in 2024. Overall, the company's cash liquidity weakened after 2021, although it remained near the 0.5 level in recent years.