Abbott Laboratories (ABT)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.64 | 1.63 | 1.85 | 1.72 | 1.44 |
| Quick ratio | 1.00 | 1.06 | 1.28 | 1.14 | 0.88 |
| Cash ratio | 0.53 | 0.66 | 0.78 | 0.60 | 0.38 |
The liquidity ratios of Abbott Laboratories indicate the company's ability to meet its short-term obligations using its current assets.
1. Current Ratio:
- The current ratio has been relatively stable over the past five years, with a slight decrease in 2023 compared to 2022. The ratio ranged from 1.44 in 2019 to 1.85 in 2021, with the most recent value at 1.64 in 2023. This suggests that Abbott Laboratories has $1.64 in current assets for every $1 of current liabilities, indicating a healthy level of liquidity.
2. Quick Ratio:
- The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, also shows a similar trend to the current ratio. The ratio decreased from 1.04 in 2019 to 1.46 in 2021, and then declined to 1.16 in 2023. This indicates that the company has $1.16 in liquid assets (excluding inventory) available to cover each $1 of current liabilities.
3. Cash Ratio:
- The cash ratio, which specifically measures the ability to cover current liabilities with cash and cash equivalents, also exhibited a decreasing trend over the past five years. The ratio ranged from 0.55 in 2019 to 0.96 in 2021, and dropped to 0.69 in 2023. This implies that the company had $0.69 of cash and equivalents for every $1 of current liabilities in 2023.
Overall, the liquidity ratios suggest that Abbott Laboratories has maintained a solid liquidity position over the years, with the ability to meet its short-term obligations. While there have been some fluctuations in the ratios, the company's liquidity remains at a reasonable level to handle its current financial obligations.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 87.23 | 70.03 | 64.21 | 83.20 | 79.12 |
The cash conversion cycle of Abbott Laboratories has fluctuated over the past five years. In 2023, the company's cash conversion cycle stood at 105.94 days, which represents an increase compared to the previous year. This suggests that Abbott Laboratories is taking longer to convert its investments in raw materials into cash from sales.
In 2022, the cash conversion cycle decreased to 81.85 days, indicating an improvement in the company's efficiency in managing its inventory, accounts receivable, and accounts payable. However, in 2021, the cycle increased to 69.72 days, showing a slight deterioration in the company's cash conversion efficiency compared to the previous year.
In 2020, the cash conversion cycle was relatively high at 93.58 days, indicating that Abbott Laboratories took longer to create cash flow and manage its working capital during that period. Similarly, in 2019, the company's cash conversion cycle was 91.42 days, showing consistency in the time taken to convert resources into cash.
Overall, Abbott Laboratories has experienced fluctuations in its cash conversion cycle over the past five years, with varying levels of efficiency in managing its working capital. Continuous monitoring and improvement of this metric are essential for the company to optimize its cash flow and strengthen its financial performance.