Thermo Fisher Scientific Inc. (NYSE:TMO)

Current Ratio

The current ratio initially showed an upward trend from March 2020 (2.32) through October 2021 (3.19), indicating an improvement in the company's short-term liquidity position. However, a sharp decline was observed in December 2021 to 1.5, followed by a period of relative stability fluctuating slightly around the range of 1.27 to 1.93 through mid-2025. This suggests a reduction in current assets relative to current liabilities after late 2021, but the company maintained a current ratio generally above 1.2, indicating continued ability to meet short-term obligations.

Quick Ratio

The quick ratio mirrored the initial rise seen in the current ratio, increasing from 1.48 in March 2020 to a peak of 2.37 in October 2021. This indicates a strengthening in the company's immediate liquidity excluding inventory. A pronounced decline occurred in December 2021 to 1.0, followed by fluctuations mostly between 0.8 and 1.29 up to mid-2025. Though lower than the earlier peak, the quick ratio remained near or above 1.0 in most quarters, suggesting a generally adequate coverage of current liabilities by liquid assets without relying on inventory.

Cash Ratio

The cash ratio exhibited a pattern of volatility throughout the periods. It rose from 0.54 in March 2020 to a peak of 1.55 in October 2021, reflecting considerable growth in the most liquid assets (cash and cash equivalents). However, a sharp reversal occurred afterward, dropping to 0.33 in December 2021 and declining further to as low as 0.17 in October 2022. While some recovery followed, with values fluctuating around 0.22 to 0.6 through mid-2025, the cash ratio remained below 0.6 for most of this latter period. This shows a decrease in the company's cash reserves relative to current liabilities, indicating more reliance on other liquid assets for short-term coverage.

Summary of Liquidity Trends

Across the three liquidity ratios, a consistent pattern emerges with significant improvement in liquidity through 2021, reaching peaks in the third quarter or early fourth quarter of that year. Subsequently, all ratios experienced notable declines starting in late 2021, with stabilization thereafter at lower levels compared to the peaks. The current and quick ratios indicate the company maintained reasonable liquidity after the decline, while the cash ratio reveals reduced cash holdings relative to liabilities. This pattern may suggest strategic changes in asset management or shifts in working capital requirements impacting the composition of liquid assets.

The analysis of the quarterly financial data reveals notable fluctuations and an overall trend in the liquidity position over the observed periods. The current assets and current liabilities exhibit considerable variation, affecting the current ratio, which measures short-term financial health.

Current Assets

Current assets start at 12,738 million US dollars in the first period and generally increase reaching a peak of 25,476 million in June 2024, indicating growing asset availability. Despite fluctuations, the asset base remains above 18,000 million in most quarters, showing overall strength and growth over time. Peaks are evident particularly in December 2022, December 2023, and mid-2024, suggesting seasonal or business cycle influences on asset holdings.

Current Liabilities

Current liabilities also increase substantially, from 5,500 million US dollars initially to peaks around 17,010 million in December 2022 and then stabilize somewhat around 13,000 to 15,000 million in later periods. The initial rapid increase from mid-2020 to the end of 2020 signals increased short-term obligations, which appear to moderate but remain elevated compared to the earliest quarters.

Current Ratio

The current ratio starts strong, with values above 2.0 in early 2020 periods, even peaking near 3.19 in October 2021, indicating robust liquidity at that time. However, there is a sharp decline by December 2021 to 1.5, signifying a sudden compression of liquidity relative to liabilities. Following this low point, the ratio fluctuates mostly between 1.27 and 1.93, generally staying above the critical threshold of 1.0, which implies the company maintains sufficient short-term asset coverage for its current liabilities but with less cushion than in prior years.

Overall, the observed trend shows growth in current assets accompanied by increases in current liabilities, which together influence the current ratio's volatility. There is a clear shift from a high liquidity position in early periods toward a tighter but still adequate liquidity situation in recent quarters. This pattern may reflect changing operational needs, investment cycles, or working capital management strategies. The cyclical peaks in assets and liabilities imply the necessity for constant liquidity monitoring to ensure stable financial health.

The financial data reveals several noteworthy trends over the observed quarters regarding liquidity as reflected by quick assets, current liabilities, and the resultant quick ratio.

Total Quick Assets

The total quick assets exhibit a fluctuating pattern throughout the periods. Beginning at $8,147 million in the first quarter of 2020, there is a general upward trend with intermittent declines. Peaks are noted in the fourth quarters of 2020 and 2021 at $16,797 million and $18,392 million respectively, indicating seasonal or cyclical increases. However, a notable decrease follows in early 2022, with values dropping to approximately $11,705 million before gradually rising again and stabilizing at levels roughly between $15,000 million to $18,000 million towards the end of 2023 and into 2024. The data suggest some volatility but an overall increase when comparing the beginning and ending figures over the analyzed timeframe.

Current Liabilities

Current liabilities demonstrate a significant increase from $5,500 million in Q1 2020 to a peak of $17,010 million in Q4 2022. This sharp rise, particularly visible in the quarters ending Dec 31, 2020 and Dec 31, 2022, suggests either increased short-term obligations or operational financing requirements during these periods. Following the peak in 2022, current liabilities gradually decline to approximately $12,718 million by Q2 2025. The substantial fluctuations imply changes in working capital management or possibly increased short-term debt or payables at certain points in time.

Quick Ratio

The quick ratio, an indicator of short-term liquidity, exhibits notable variability across the periods. Initially, the ratio improves from 1.48 in early 2020 to a high of 2.37 in Q3 2021, indicating enhanced liquidity and the company’s ability to meet short-term obligations without reliance on inventory. However, a sharp decline follows in the subsequent quarter, plunging to 1.00 and then slightly below one at 0.97 in early 2022, indicating a period when quick assets were nearly equal to current liabilities, potentially signaling a tighter liquidity scenario. The ratio stabilizes around the range of 1.0 to 1.3 from 2022 onward, with some incremental improvements toward the later quarters, reaching 1.29 by Q2 2025. This pattern indicates the company generally maintains adequate quick asset coverage of current liabilities, albeit with periods of constrained liquidity.

In summary, the company displays cyclical tendencies in its liquid asset holdings and current liabilities, which affect overall liquidity metrics. While the quick ratio remains mostly above one, signaling sufficient liquid resources to cover immediate liabilities, the significant fluctuations in quick assets and liabilities should be monitored closely for liquidity risk. The peaks in liabilities are matched at times by increases in quick assets, but certain quarters show tighter liquidity positions that may warrant strategic management attention.

The analysis of the financial data reveals several notable trends over the observed periods.

Total Cash Assets

The total cash assets exhibit considerable fluctuation across the quarters. Initially, there is a marked increase from 2,981 million US$ in March 2020 to 10,325 million US$ by December 2020. This peak is followed by a pronounced decline reaching 1,888 million US$ in July 2022. Subsequently, the cash assets recover sharply to 8,524 million US$ by the end of December 2022, before again decreasing to mid-range values in 2023 and early 2024. The values settle within a range from approximately 5,500 million US$ to 8,800 million US$ in the most recent quarters, indicating somewhat stabilized cash assets after previous volatility.

Current Liabilities

Current liabilities have increased steadily from 5,500 million US$ in March 2020 to a peak of 17,010 million US$ in December 2022. After this peak, liabilities show a generally downward trend, reducing to around 12,700 million US$ by June 2025. Despite the reduction, the liabilities remain significantly higher than the initial period, suggesting increased short-term obligations that may reflect growth or changes in operating activities.

Cash Ratio

The cash ratio starts at a moderate 0.54 in March 2020 and rises sharply to a peak of 1.55 in October 2021, indicating strong liquidity in terms of cash relative to current liabilities during that quarter. However, following this peak, the ratio declines substantially, dropping to as low as 0.17 in July 2022. Thereafter, the cash ratio experiences modest fluctuations but generally remains below 0.6 through June 2025, indicating a more conservative liquidity position relative to current liabilities over the longer term.

In summary, the data portrays a period of high liquidity and cash asset accumulation in late 2020 and 2021, followed by increased current liabilities and a subsequent decline in liquidity ratios. The company's liquidity, while recovering slightly in some recent quarters, remains moderate relative to current liabilities, suggesting careful management of short-term financial obligations amid fluctuating cash reserves.