Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
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Liquidity Ratios (Summary)
Zoetis Inc., liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Current ratio | ||||||
| Quick ratio | ||||||
| Cash ratio |
Based on: 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), 10-K (reporting date: 2019-12-31).
- Current Ratio
- The current ratio demonstrated variability over the five-year period. It initially increased from 2.63 in 2019 to a peak of 3.86 in 2021, indicating an improvement in the company’s ability to cover short-term liabilities with current assets. However, the ratio declined to 2.37 in 2022 before recovering to 3.36 in 2023. This fluctuation suggests changes in working capital management or shifts in current assets relative to current liabilities across the years.
- Quick Ratio
- The quick ratio, which excludes inventories from current assets, mirrored the pattern of the current ratio but at lower levels. It rose from 1.67 in 2019 to reach 2.57 in 2021, highlighting enhanced liquidity excluding inventory. A notable decrease occurred in 2022 to 1.51, followed by a modest increase to 1.77 in 2023. This pattern indicates that liquid assets available to satisfy immediate liabilities experienced a degree of volatility, with 2022 reflecting a tighter liquidity position.
- Cash Ratio
- The cash ratio showed an upward trend from 1.07 in 2019 to 1.94 in 2021, signifying increased cash and cash equivalents relative to current liabilities. In 2022, the ratio declined sharply to 1.13 and slightly decreased again to 1.08 in 2023, approaching the 2019 level. The reduction in cash ratio during the last two years could point to a decrease in the most liquid assets or higher short-term liabilities, impacting the company's immediate liquidity position.
Current Ratio
Zoetis Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| 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. | ||||||
| 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: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- The current assets of the company showed a rising trend from 2019 through 2022, increasing from $4,748 million in 2019 to a peak of $7,506 million in 2022. In 2023, current assets decreased to $6,343 million, indicating a decline after a period of consistent growth.
- Current Liabilities
- Current liabilities experienced fluctuations over the observed period. Starting at $1,806 million in 2019, the value rose to $2,170 million in 2020, dropped to $1,797 million in 2021, then sharply increased to $3,167 million in 2022, before declining again to $1,889 million in 2023. This volatility suggests some variability in short-term obligations across the years.
- Current Ratio
- The current ratio, which measures short-term liquidity, demonstrated considerable variation. Beginning at 2.63 in 2019, it increased steadily to 3.86 in 2021, indicating enhanced liquidity. However, it declined to 2.37 in 2022 before rebounding to 3.36 in 2023. The ratio remained above 2.0 throughout, suggesting a generally strong liquidity position despite fluctuations.
Quick Ratio
Zoetis Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | ||||||
| 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. | ||||||
| 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: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total quick assets
- Total quick assets showed a noticeable increase from 2019 to 2020, rising from 3,020 million USD to 4,617 million USD. This value remained almost stable in 2021 with a minor increase to 4,618 million USD and slightly increased again in 2022 to 4,796 million USD. However, there was a significant decline in 2023 when total quick assets dropped to 3,345 million USD.
- Current liabilities
- Current liabilities increased from 1,806 million USD in 2019 to 2,170 million USD in 2020. They then decreased to 1,797 million USD in 2021 before sharply rising to 3,167 million USD in 2022. This was followed by a decrease to 1,889 million USD in 2023.
- Quick ratio
- The quick ratio experienced an upward trend from 1.67 in 2019 to 2.13 in 2020, and further increased to 2.57 in 2021, indicating improved short-term liquidity during this period. However, the ratio declined significantly in 2022 to 1.51, suggesting reduced liquidity, before recovering somewhat to 1.77 in 2023.
- Overall observations
- The data reflects fluctuations in liquidity over the five-year period. While total quick assets and quick ratio improved initially through 2021, these improvements were not sustained, with both indicators declining in 2022 and 2023. Current liabilities fluctuated notably, peaking in 2022 which corresponded with the lowest quick ratio recorded. The partial recovery of the quick ratio in 2023, alongside reduced liabilities and lower quick assets compared to previous highs, suggests a shift in the company's short-term financial position towards a more balanced, yet less liquid state than in prior years.
Cash Ratio
Zoetis Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | ||||||
| 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. | ||||||
| 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: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total cash assets
- The total cash assets displayed a significant increase from 1934 million US dollars in 2019 to a peak of 3604 million in 2020. However, this was followed by a gradual decline over the subsequent years, dropping slightly to 3485 million in 2021, then rising marginally to 3581 million in 2022 before decreasing sharply to 2041 million in 2023. Overall, there is a clear pattern of initial growth followed by volatility and a substantial reduction in the most recent year.
- Current liabilities
- Current liabilities generally increased from 1806 million in 2019 to 2170 million in 2020. Subsequently, they decreased to 1797 million in 2021, then rose notably to a peak of 3167 million in 2022 before falling again to 1889 million in 2023. The trend reveals fluctuations with a notable spike in 2022, indicating periods of increased short-term obligations.
- Cash ratio
- The cash ratio showed an upward trend from 1.07 in 2019 to a high of 1.94 in 2021, suggesting improved liquidity during this period. However, the ratio declined to 1.13 in 2022 and further to 1.08 in 2023, indicating a reduction in the ability to cover current liabilities with cash and cash equivalents. Despite this decline, the ratio remained above 1.0 throughout, signaling that cash assets were still sufficient to meet current liabilities.