Baxter International Inc (BAX)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.48 | 1.69 | 2.09 | 2.52 | 2.32 |
| Quick ratio | 0.93 | 0.96 | 1.36 | 1.79 | 1.66 |
| Cash ratio | 0.49 | 0.36 | 0.70 | 1.12 | 1.03 |
Baxter International Inc.'s liquidity ratios have shown a decline over the past five years. The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, decreased from 2.32 in 2019 to 1.48 in 2023. This indicates a diminishing ability to meet short-term obligations using current assets.
The quick ratio, a more stringent liquidity measure that excludes inventory from current assets, also experienced a downward trend from 1.81 in 2019 to 1.04 in 2023. This suggests that the company may face challenges in meeting immediate obligations without relying on inventory.
Furthermore, the cash ratio, which indicates the proportion of current liabilities that can be covered by cash and cash equivalents, declined from 1.22 in 2019 to 0.63 in 2023. This downward trend signals that Baxter International Inc. has a lower capacity to settle short-term obligations solely using cash and cash equivalents.
Overall, the decreasing trend in all three liquidity ratios from 2019 to 2023 implies a potential weakening of Baxter International Inc.'s short-term financial flexibility and ability to meet its immediate financial obligations. It may indicate a need for the company to improve its liquidity management strategies to ensure financial stability and operational continuity.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 106.73 | 99.79 | 119.27 | 65.44 | 58.47 |
The cash conversion cycle for Baxter International Inc. has shown some fluctuations over the past five years.
In 2023, the cash conversion cycle increased to 125.01 days from 123.54 days in 2022, indicating that the company took slightly longer to convert its investment in inventory and other resources into cash during the year. This may suggest potential inefficiencies in inventory management or delays in collecting receivables.
Comparing 2023 to 2021, there was a decrease in the cash conversion cycle from 132.43 days to 125.01 days, which could signify an improvement in the company's working capital management efficiency during this period.
In 2020, the cash conversion cycle was 109.91 days, which was lower than in 2023, indicating that the company was more efficient in converting its investments into cash in 2020.
Furthermore, in 2019, the cash conversion cycle was 102.99 days, the lowest among the five years analyzed. This suggests that the company was most effective in managing its working capital in 2019 compared to the other years.
Overall, fluctuations in the cash conversion cycle can provide insights into Baxter International Inc.'s liquidity management, operational efficiency, and effectiveness in managing its working capital.