AbbVie Inc (ABBV)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.66 | 0.87 | 0.96 | 0.79 | 0.84 |
| Quick ratio | 0.14 | 0.34 | 0.31 | 0.28 | 0.30 |
| Cash ratio | 0.14 | 0.34 | 0.31 | 0.28 | 0.30 |
AbbVie Inc's liquidity ratios, as reflected in the data provided, show a fluctuating trend over the years.
1. Current Ratio: This ratio measures the ability of a company to cover its short-term liabilities with its short-term assets. AbbVie's current ratio has been below 1 in recent years, indicating that the company may have difficulty in meeting its short-term obligations purely based on its current assets. The ratio improved marginally in 2022 but declined again in the following years.
2. Quick Ratio: Also known as the acid-test ratio, this ratio provides a more stringent measure of a company's liquidity as it excludes inventory from current assets. AbbVie's quick ratio is consistently lower than the current ratio, falling below 0.5 in most years, suggesting that the company may struggle to meet its immediate liabilities without relying on inventory.
3. Cash Ratio: The cash ratio is the most conservative liquidity ratio as it measures the company's ability to cover its current liabilities with only cash and cash equivalents. AbbVie's cash ratio remains at a low level in each year, indicating that the company holds relatively little cash compared to its short-term obligations.
Overall, the liquidity ratios of AbbVie Inc based on the provided data raise some concerns about the company's short-term financial health and its ability to meet obligations promptly, particularly given the persistent low levels of the current, quick, and cash ratios. It would be important for AbbVie to closely monitor and manage its liquidity position to ensure it can meet its financial obligations as they fall due.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 90.28 | 73.29 | 75.02 | 65.44 | 78.52 |
The cash conversion cycle of AbbVie Inc has exhibited fluctuations over the years. From 2020 to 2021, there was a significant improvement in the cash conversion cycle, decreasing from 78.52 days to 65.44 days. This indicates that the company was managing its working capital more efficiently, which is a positive sign.
However, from 2021 to 2022, there was an increase in the cash conversion cycle to 75.02 days, suggesting that the company may have experienced delays in converting its investments in inventory into cash receipts. The trend continued in 2023 with a slightly decreased cycle of 73.29 days, but it remained above the 2021 level.
By the end of 2024, the cash conversion cycle surged to 90.28 days, signifying a significant increase from the previous year. This indicates that AbbVie Inc may have faced challenges in managing its cash flow efficiently and converting its resources into cash.
Overall, while there was an initial improvement in the cash conversion cycle, the subsequent fluctuations suggest the need for AbbVie Inc to focus on optimizing its working capital management to ensure a more stable cash conversion cycle in the future.