Liquidity ratios measure the company ability to meet its short-term obligations.
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Liquidity Ratios (Summary)
Dec 31, 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: 2024-12-31), 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).
The analysis of the liquidity ratios over the five-year period reveals notable fluctuations indicative of varying short-term financial stability.
- Current ratio
- The current ratio showed a slight increase from 1.35 in 2020 to 1.40 in 2021, suggesting an improvement in the company's ability to cover its short-term liabilities with current assets during this period. However, it experienced a decline to 1.22 in 2022, followed by a significant drop to 0.91 in 2023, indicating a potential liquidity concern that year, with current liabilities surpassing current assets. The ratio rebounded to 1.17 in 2024, suggesting a recovery in short-term liquidity, though not reaching earlier levels.
- Quick ratio
- The quick ratio, a more stringent measure excluding inventory, increased from 0.78 in 2020 to 1.00 in 2021, signaling a strengthened capacity to meet immediate obligations without relying on inventory sales. This was followed by a decrease to 0.80 in 2022 and a further decline to 0.50 in 2023, reflecting increased liquidity pressure. It improved to 0.74 in 2024, indicating partial restoration of quick assets relative to current liabilities.
- Cash ratio
- The cash ratio exhibited an initial rise from 0.47 in 2020 to 0.73 in 2021, pointing to a higher proportion of cash and cash equivalents available. Subsequently, it decreased to 0.54 in 2022 and sharply declined to 0.27 in 2023, which may highlight a significant reduction in the most liquid assets during that year. The ratio increased again to 0.48 in 2024, suggesting some recovery in cash reserves.
Overall, the liquidity ratios reflect a pattern of improvement in 2021, followed by a decline in 2022 and 2023, with partial recovery in 2024. The considerable dip in 2023 across all measures warrants attention as it signals potential short-term financial strain. The subsequent improvement in 2024 indicates measures may have been taken to strengthen the company’s liquidity position.
Current Ratio
Dec 31, 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. | ||||||
Johnson & Johnson | ||||||
Merck & Co. 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: 2024-12-31), 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 increased significantly from 35,067 million US dollars in 2020 to a peak of 59,693 million US dollars in 2021. After this peak, current assets declined to 51,259 million in 2022 and further to 43,333 million in 2023. However, a partial recovery is observed in 2024 with current assets rising again to 50,358 million US dollars.
- Current Liabilities
- Current liabilities also exhibited a rising trend from 25,920 million US dollars in 2020 to 42,671 million in 2021. Subsequently, liabilities remained relatively stable around this elevated level in 2022 at 42,138 million but increased again in 2023 to 47,794 million before declining to 42,995 million in 2024.
- Current Ratio
- The current ratio demonstrated initial stability, moving from 1.35 in 2020 to a slight increase at 1.40 in 2021. This was followed by a decrease to 1.22 in 2022. Notably, there was a marked decline in 2023 to 0.91, suggesting potential liquidity concerns during that year. In 2024, the ratio improved to 1.17 but did not return to earlier levels.
- Overall Analysis
- The data reveals that both current assets and liabilities increased sharply between 2020 and 2021, reflecting expansion or increased operational scale. The decline in current assets from 2021 to 2023, coupled with a rise in liabilities in 2023, led to a deterioration of liquidity as indicated by the drop in the current ratio below 1. This suggests that during 2023, the company may have faced short-term liquidity pressures. The partial recovery in 2024 shows improved liquidity, though the ratio remains below the earlier peak levels, indicating ongoing attention to working capital management is necessary.
Quick Ratio
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Cash and cash equivalents | ||||||
Short-term investments | ||||||
Trade accounts receivable, less allowance for doubtful accounts | ||||||
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. | ||||||
Johnson & Johnson | ||||||
Merck & Co. 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: 2024-12-31), 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.
- Total Quick Assets
- The total quick assets showed an initial substantial increase from 20,151 million US dollars in 2020 to 42,548 million US dollars in 2021. This was followed by a decline to 33,684 million in 2022 and a further drop to the lowest point of 23,867 million in 2023. In 2024, there was a partial recovery to 31,940 million. Overall, total quick assets exhibited volatility with a peak in 2021 and a downward trend thereafter, ending with a moderate rebound.
- Current Liabilities
- Current liabilities rose markedly from 25,920 million US dollars in 2020 to 42,671 million in 2021. Thereafter, they remained at a high and relatively stable level, with slight fluctuations: 42,138 million in 2022, increasing to 47,794 million in 2023, before decreasing slightly to 42,995 million in 2024. This pattern suggests consistently high short-term obligations following the initial increase in 2021.
- Quick Ratio
- The quick ratio increased from 0.78 in 2020 to 1.0 in 2021, indicating improved liquidity capabilities at that time. However, this was followed by a decline to 0.8 in 2022 and a significant drop to the lowest point of 0.5 in 2023, suggesting weakening short-term financial strength and potential liquidity risks. In 2024, the quick ratio partially recovered to 0.74, though it remained below the levels seen in 2020 and 2021.
- Overall Analysis
- The data illustrates that the company experienced a marked improvement in liquidity and asset position in 2021, with both total quick assets and quick ratio reaching their highest values, alongside a significant rise in current liabilities. However, post-2021, total quick assets and quick ratio declined substantially by 2023, indicating reduced liquid resources relative to obligations, and a potential liquidity constraint. The slight improvements in 2024 suggest initial steps to restore liquidity, but short-term liabilities remain elevated. This trend demands close attention to managing current liabilities and enhancing the asset base to support liquidity.
Cash Ratio
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Cash and cash equivalents | ||||||
Short-term investments | ||||||
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. | ||||||
Johnson & Johnson | ||||||
Merck & Co. 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: 2024-12-31), 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 demonstrate a fluctuating trend over the five-year period. There was a significant increase from 12,221 million US dollars at the end of 2020 to 31,069 million in 2021. This was followed by a decrease to 22,732 million in 2022, then a further drop to 12,690 million in 2023 before rising again to 20,477 million in 2024. These variations indicate periods of cash accumulation and substantial utilization or outflows in alternating years.
- Current Liabilities
- Current liabilities increased markedly from 25,920 million US dollars in 2020 to a peak of 47,794 million in 2023. In 2021 and 2022, liabilities rose substantially to 42,671 million and 42,138 million respectively, maintaining a generally elevated level compared to 2020. However, in 2024, current liabilities decreased to 42,995 million, showing some reduction but still substantially higher than the initial 2020 level.
- Cash Ratio
- The cash ratio, representing the proportion of cash assets to current liabilities, reflects the observed trends in cash and liabilities. The ratio improved from 0.47 in 2020 to a peak of 0.73 in 2021, indicating stronger liquidity in that year. Subsequently, it declined to 0.54 in 2022 and further sharply to 0.27 in 2023, suggesting reduced immediate liquidity relative to obligations. In 2024, the ratio partially recovered to 0.48, yet remained below the 2021 peak.
- Overall Analysis
- The data shows a pattern of considerable fluctuations in liquidity position. Cash reserves increased sharply in 2021 but were not sustained in subsequent years, while current liabilities consistently grew over the period, peaking in 2023. The drop in the cash ratio to 0.27 in 2023 highlights a temporary weakening in the company's capacity to cover short-term liabilities with cash assets. The partial recovery of cash assets and cash ratio in 2024 suggests efforts to restore liquidity. The trends imply a need for attention to cash management and liability control to maintain sufficient liquidity.