Amgen Inc (AMGN)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.65 | 1.41 | 1.59 | 1.81 | 1.44 |
| Quick ratio | 1.27 | 1.05 | 1.21 | 1.41 | 1.08 |
| Cash ratio | 0.84 | 0.65 | 0.73 | 0.95 | 0.72 |
The liquidity ratios of AMGEN Inc. over the past five years show fluctuations in its ability to meet short-term obligations effectively.
1. Current Ratio:
- The current ratio measures the company's ability to meet short-term liabilities with its current assets. AMGEN's current ratio has varied between 1.41 and 1.81 over the five-year period, with a current ratio of 1.65 in 2023.
- A current ratio above 1 indicates that AMGEN has more current assets than current liabilities, suggesting a relatively strong liquidity position. However, the decreasing trend from 2020 to 2022 could indicate potential liquidity challenges during those years.
2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventories from current assets. AMGEN's quick ratio ranged from 1.10 to 1.48 over the five years, with a quick ratio of 1.13 in 2023.
- The quick ratio above 1 indicates that AMGEN can cover its short-term liabilities without relying on the sale of inventories. The slight increase in 2023 compared to the previous years could indicate improved liquidity management.
3. Cash Ratio:
- The cash ratio is the most conservative measure of liquidity, focusing solely on the company's ability to cover current liabilities with cash and cash equivalents. AMGEN's cash ratio fluctuated between 0.73 and 1.07 over the five-year period, with a cash ratio of 0.73 in 2023.
- A cash ratio above 1 indicates that the company has sufficient cash to cover its short-term obligations. The decreasing trend in the cash ratio from 2020 to 2023 may suggest a decreased ability to meet short-term obligations solely from cash reserves.
In conclusion, while AMGEN generally maintained ratios above 1 across the board, indicating a healthy liquidity position, the fluctuations in these ratios highlight the importance of consistent monitoring and management of liquidity to ensure the company can meet its short-term obligations effectively.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 273.28 | 127.29 | 110.79 | 199.31 | 219.17 |
The cash conversion cycle of AMGEN Inc. has fluctuated over the past five years. In 2023, the company's cash conversion cycle was 438.74 days, significantly higher compared to the previous year's cycle of 270.26 days. This indicates that in 2023, it took AMGEN longer to convert its investments in inventory and other resources into cash.
In 2021 and 2020, the cash conversion cycle was 224.91 days and 214.56 days, respectively, showing an improvement in efficiency compared to 2023. However, the cycle increased in 2019 to 248.82 days before decreasing in the following years.
A longer cash conversion cycle can tie up company funds and impact liquidity and working capital management. It is crucial for AMGEN to assess the reasons behind the increase in the cash conversion cycle in 2023 to identify areas for improvement in managing inventory, receivables, and payables to enhance operational efficiency and cash flow.