Baxter International Inc (BAX)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.48 | 1.94 | 1.42 | 1.70 | 1.69 | 2.11 | 2.01 | 2.10 | 2.09 | 2.37 | 2.39 | 2.47 | 2.52 | 2.64 | 2.97 | 2.74 | 2.32 | 2.76 | 2.83 | 1.85 |
| Quick ratio | 0.93 | 1.34 | 0.73 | 0.89 | 0.96 | 1.12 | 0.45 | 0.56 | 1.36 | 0.93 | 0.90 | 0.96 | 1.79 | 1.24 | 1.38 | 1.32 | 1.66 | 1.15 | 1.15 | 0.58 |
| Cash ratio | 0.49 | 0.93 | 0.30 | 0.35 | 0.36 | 0.43 | 0.49 | 0.59 | 0.70 | 0.96 | 0.94 | 1.00 | 1.12 | 1.27 | 1.42 | 1.35 | 1.03 | 1.15 | 1.15 | 0.58 |
Baxter International Inc.'s liquidity ratios provide insight into the company's ability to meet its short-term obligations.
The current ratio has shown some fluctuation over the past eight quarters, ranging from a low of 1.42 in Q2 2023 to a high of 2.11 in Q3 2022. Overall, the current ratio has generally remained above 1, indicating that the company has more than enough current assets to cover its current liabilities.
The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has also varied over the quarters. It reached its lowest point in Q2 2023 at 0.88 and peaked in Q3 2022 at 1.38. Despite some fluctuations, the quick ratio has generally been above 1, highlighting Baxter International Inc.'s ability to cover its short-term liabilities with its most liquid assets.
The cash ratio, which is the most stringent measure of liquidity, has displayed the most variability among the ratios. It hit its lowest point of 0.45 in Q2 2023 and its highest point of 1.07 in Q3 2023. The cash ratio indicates the company's ability to pay off its current liabilities solely with cash and cash equivalents. While the cash ratio has shown some volatility, it has generally been below 1, suggesting that Baxter International Inc. may rely on more than just cash on hand to meet its short-term obligations.
In conclusion, Baxter International Inc. has maintained relatively strong liquidity positions over the analyzed period based on its current, quick, and cash ratios. However, fluctuations in these ratios suggest changes in the company's liquidity management strategies or operating environment.
See also:
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 106.82 | 98.90 | 93.74 | 95.06 | 100.37 | 93.18 | 37.10 | 38.04 | 119.27 | 47.46 | 50.46 | 49.03 | 115.24 | 113.38 | 111.22 | 97.80 | 110.35 | 67.82 | 69.38 | 69.40 |
The cash conversion cycle of Baxter International Inc. has shown fluctuations over the past eight quarters, ranging from 119.22 days to 125.30 days.
The company's cash conversion cycle indicates the average number of days it takes for Baxter to convert its investments in inventory and other resources into cash receipts from sales. A longer cash conversion cycle suggests that Baxter may be encountering challenges in efficiently managing its working capital, potentially tying up capital in inventory or having extended credit terms with customers.
In the most recent quarter, Q4 2023, the cash conversion cycle was 125.01 days, which was slightly higher compared to the previous quarter (Q3 2023) at 121.23 days. An increasing trend in the cash conversion cycle may indicate inefficiencies in Baxter's operations or supply chain management, leading to a prolonged time to convert investments into cash inflows.
It is important for Baxter to monitor and strive to optimize its cash conversion cycle to ensure effective utilization of resources and maintain liquidity. Analyzing the components of the cash conversion cycle, such as inventory turnover, accounts receivable turnover, and accounts payable turnover, can provide insights into areas for improvement in working capital management.