Stock Analysis on Net
Stock Analysis on Net

McKesson Corp. (NYSE:MCK)

$22.49

This company has been moved to the archive! The financial data has not been updated since October 27, 2016.

Analysis of Liquidity Ratios

Microsoft Excel

Liquidity ratios measure the company ability to meet its short-term obligations.

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Liquidity Ratios (Summary)

McKesson Corp., liquidity ratios

Microsoft Excel
Mar 31, 2016 Mar 31, 2015 Mar 31, 2014 Mar 31, 2013 Mar 31, 2012 Mar 31, 2011
Current ratio
Quick ratio
Cash ratio

Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).

Current Ratio
The current ratio exhibited a slight decline from 1.19 in 2011 to 1.08 in 2013, indicating a modest reduction in short-term liquidity during this period. Subsequently, it stabilized around 1.09 to 1.10 from 2014 to 2016, suggesting a steady capacity to cover current liabilities with current assets in the later years.
Quick Ratio
The quick ratio followed a downward trend from 0.68 in 2011 to 0.58 in 2013, reflecting a decrease in the company's ability to meet short-term obligations without relying on inventory. From 2014 onward, the ratio improved slightly and remained relatively stable between 0.62 and 0.63, indicating a modest recovery and consistent liquidity position excluding inventory.
Cash Ratio
The cash ratio showed a notable decline from 0.19 in 2011 to a low of 0.11 in 2013, signaling reduced immediate liquidity in terms of cash and cash equivalents. Although there was a slight increase to a peak of 0.16 in 2015, the ratio decreased again to 0.12 in 2016, suggesting fluctuating but generally lower availability of cash relative to current liabilities over the observed period.

Current Ratio

McKesson Corp., current ratio calculation, comparison to benchmarks

Microsoft Excel
Mar 31, 2016 Mar 31, 2015 Mar 31, 2014 Mar 31, 2013 Mar 31, 2012 Mar 31, 2011
Selected Financial Data (US$ in millions)
Current assets
Current liabilities
Liquidity Ratio
Current ratio1
Benchmarks
Current Ratio, Competitors2
Abbott Laboratories
Elevance Health Inc.
Intuitive Surgical Inc.
Medtronic PLC
UnitedHealth Group Inc.

Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).

1 2016 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =

2 Click competitor name to see calculations.

Current Assets
Current assets demonstrated a generally increasing trend over the six-year period. Starting at $22,357 million in 2011, current assets increased marginally in the subsequent two years before experiencing a significant rise from 2013 to 2014. This upward momentum continued through 2015 and 2016, reaching $38,437 million by the end of the period, indicating a strengthening ability to cover short-term obligations and possible expansion of liquidity or working capital.
Current Liabilities
Current liabilities also exhibited a steady increase during the same timeframe. Beginning at $18,726 million in 2011, liabilities rose gradually each year, with a more pronounced jump from 2013 onward. By 2016, current liabilities reached $35,071 million. This parallel increase with current assets suggests rising operational or financial obligations, possibly related to growth or increased short-term financing.
Current Ratio
The current ratio remained relatively stable throughout the period, fluctuating slightly around 1.1. Starting at 1.19 in 2011, it decreased to 1.08 by 2013, then stabilized and maintained a value close to 1.1 for the remaining years. This stability indicates that, despite the increase in both assets and liabilities, the company's short-term liquidity position remained consistent, maintaining a balance between available current assets and current liabilities.

Quick Ratio

McKesson Corp., quick ratio calculation, comparison to benchmarks

Microsoft Excel
Mar 31, 2016 Mar 31, 2015 Mar 31, 2014 Mar 31, 2013 Mar 31, 2012 Mar 31, 2011
Selected Financial Data (US$ in millions)
Cash and cash equivalents
Receivables, net
Total quick assets
 
Current liabilities
Liquidity Ratio
Quick ratio1
Benchmarks
Quick Ratio, Competitors2
Abbott Laboratories
Elevance Health Inc.
Intuitive Surgical Inc.
Medtronic PLC
UnitedHealth Group Inc.

Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).

1 2016 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =

2 Click competitor name to see calculations.

Total Quick Assets
The total quick assets show a fluctuating upward trend over the six-year period. Starting at 12,799 million US dollars in 2011, the value slightly increased to 13,126 million in 2012 but declined to 12,431 million in 2013. From 2014 onwards, there was a marked increase, reaching 18,386 million in 2014, 21,255 million in 2015, and peaking at 22,028 million in 2016. This indicates an overall growth in liquid assets available to cover current liabilities, particularly in the latter three years.
Current Liabilities
Current liabilities consistently rose over the entire period, beginning at 18,726 million in 2011 and increasing steadily each year to reach 35,071 million in 2016. This represents a near doubling of short-term obligations, with notable jumps in 2014 and onward, suggesting an increasing reliance on current liabilities to finance operations or other activities.
Quick Ratio
The quick ratio remained below 1.0 throughout the period, indicating that quick assets were insufficient to cover current liabilities at face value. It started at 0.68 in 2011, then declined to 0.61 in 2012 and 0.58 in 2013, signaling a deterioration in liquidity during the early years. However, from 2014, the ratio slightly improved and stabilized around 0.62-0.63, despite the rising liabilities, reflecting the increase in quick assets helping to maintain a relatively steady liquidity position.
Overall Analysis
Despite the increasing total quick assets, the much larger and more rapid rise in current liabilities has led to consistently low liquidity ratios below 1. The firm’s quick ratio improvement starting in 2014 indicates some mitigation of liquidity risk through asset growth, but the level remains modest, suggesting potential vulnerability to short-term financial pressures if liabilities continue to grow at this pace. Monitoring the balance between quick assets and current liabilities will be critical going forward.

Cash Ratio

McKesson Corp., cash ratio calculation, comparison to benchmarks

Microsoft Excel
Mar 31, 2016 Mar 31, 2015 Mar 31, 2014 Mar 31, 2013 Mar 31, 2012 Mar 31, 2011
Selected Financial Data (US$ in millions)
Cash and cash equivalents
Total cash assets
 
Current liabilities
Liquidity Ratio
Cash ratio1
Benchmarks
Cash Ratio, Competitors2
Abbott Laboratories
Elevance Health Inc.
Intuitive Surgical Inc.
Medtronic PLC
UnitedHealth Group Inc.

Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).

1 2016 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =

2 Click competitor name to see calculations.

Total Cash Assets
The total cash assets showed a fluctuating trend over the six-year period. Starting at $3,612 million in 2011, there was a decrease each year until 2013 where cash assets reached their lowest point at $2,456 million. Subsequently, a significant increase was observed in 2014 and 2015, peaking at $5,341 million. However, in 2016, the cash assets declined again to $4,048 million, indicating volatility in cash holdings.
Current Liabilities
Current liabilities displayed a consistent upward trend throughout the period. From $18,726 million in 2011, liabilities increased each year, reaching $35,071 million in 2016. The rate of increase was particularly notable from 2013 onwards, suggesting growing short-term obligations or operational scale expansion.
Cash Ratio
The cash ratio, representing the ability to cover current liabilities with cash assets, generally declined over the years. It began at 0.19 in 2011 and decreased to a low of 0.11 in 2013. Despite a slight recovery in 2014 and 2015, reaching 0.16, the ratio declined again in 2016 to 0.12. This trend indicates decreasing liquidity relative to current liabilities despite variations in cash assets.
Overall Analysis
While total cash assets experienced volatility with a peak in 2015, current liabilities consistently increased, resulting in a generally declining cash ratio. This suggests that although the company occasionally increased its cash reserves, these increases were insufficient to keep pace with the growth in current liabilities, potentially indicating tighter liquidity positions over the period analyzed.