Amgen Inc (AMGN)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.26 | 1.65 | 1.41 | 1.59 | 1.81 |
| Quick ratio | 0.52 | 1.19 | 0.59 | 0.66 | 0.91 |
| Cash ratio | 0.52 | 1.19 | 0.59 | 0.66 | 0.91 |
Amgen Inc's liquidity ratios indicate its ability to meet short-term obligations. The current ratio, which measures the company's ability to cover short-term liabilities with current assets, decreased from 1.81 in 2020 to 1.26 in 2024. This indicates a declining trend in liquidity.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also declined from 0.91 in 2020 to 0.52 in 2024. This suggests a decrease in the company's ability to meet immediate obligations without relying on inventory.
The cash ratio, which shows the proportion of immediate liabilities that can be covered by cash and cash equivalents, fluctuated over the years but remained relatively low. It was 0.91 in 2020, 0.66 in 2021 and 2022, and increased to 1.19 in 2023 before dropping to 0.52 in 2024.
Overall, the decreasing trend in both the current and quick ratios, along with the low levels of the cash ratio, indicate potential liquidity challenges for Amgen Inc in meeting its short-term financial obligations. It may need to closely monitor its liquidity position and take appropriate measures to improve its short-term financial health.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 198.65 | 411.08 | 280.90 | 231.08 | 230.71 |
The cash conversion cycle of Amgen Inc has shown fluctuations over the years, indicating changes in its management of working capital. In 2020, the cycle was 230.71 days, increasing slightly to 231.08 days in 2021. However, there was a significant jump to 280.90 days in 2022, followed by a substantial increase to 411.08 days in 2023. The cycle then decreased significantly to 198.65 days in 2024.
The increasing trend from 2020 to 2023 suggests potential inefficiencies in managing accounts receivable, inventory, and accounts payable. A longer cash conversion cycle can indicate that the company is taking longer to convert its investments in inventory and accounts receivable into cash, which may lead to liquidity issues.
The sharp decrease in 2024 may indicate improved working capital management, allowing the company to convert its investments into cash more efficiently. Overall, the fluctuations in the cash conversion cycle highlight the importance of closely monitoring working capital management to ensure optimal cash flow and operational efficiency in Amgen Inc.