Bristol-Myers Squibb Company (BMY)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.25 | 1.43 | 1.25 | 1.52 | 1.58 |
| Quick ratio | 0.92 | 1.06 | 0.92 | 1.30 | 1.46 |
| Cash ratio | 0.47 | 0.57 | 0.47 | 0.87 | 1.01 |
Based on the provided data, let's analyze Bristol-Myers Squibb Company's liquidity ratios:
1. Current Ratio:
- The current ratio is used to assess a company's short-term liquidity and its ability to cover short-term obligations with its current assets.
- Bristol-Myers Squibb Company's current ratio has shown some fluctuation over the years. It decreased from 1.58 in 2020 to 1.52 in 2021, and then further declined to 1.25 in 2022. Subsequently, it improved to 1.43 in 2023 before dropping back to 1.25 in 2024.
- Generally, a current ratio above 1 indicates that a company has more current assets than current liabilities, suggesting an ability to meet short-term obligations. However, a declining trend may indicate potential liquidity challenges that need to be monitored.
2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets.
- Bristol-Myers Squibb Company's quick ratio has also shown variability over the years, declining from 1.46 in 2020 to 1.30 in 2021, and further dropping to 0.92 in 2022. It then increased to 1.06 in 2023 but fell back to 0.92 in 2024.
- A quick ratio of 1 or higher is generally considered satisfactory, as it indicates that a company can meet its short-term obligations without relying on selling inventory. A decreasing trend in the quick ratio may signal potential liquidity constraints.
3. Cash Ratio:
- The cash ratio is the most conservative measure of liquidity, focusing solely on a company's ability to cover current liabilities with its cash and cash equivalents.
- Bristol-Myers Squibb Company's cash ratio has shown a decreasing trend over the years, starting at 1.01 in 2020, dropping to 0.87 in 2021, and further decreasing to 0.47 in both 2022 and 2024. It increased slightly to 0.57 in 2023.
- A cash ratio of 1 or higher is considered strong, indicating a company can fully cover its current liabilities with cash on hand. A decreasing cash ratio may suggest a decreasing ability to cover short-term obligations with readily available cash.
In conclusion, the liquidity ratios of Bristol-Myers Squibb Company have exhibited variability and trends that should be carefully monitored to assess the company's ability to meet its short-term obligations effectively.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 69.21 | 80.80 | 69.18 | 63.67 | 53.17 |
The cash conversion cycle for Bristol-Myers Squibb Company has shown an increasing trend over the years. In December 2020, the company had a cash conversion cycle of 53.17 days, which increased to 63.67 days by December 2021, indicating a lengthening of the time it takes for the company to convert its investments in inventory back to cash.
Further, by December 2022, the cash conversion cycle further extended to 69.18 days, suggesting potential challenges in efficiently managing the company's working capital. However, there was a slight decrease in the cash conversion cycle to 69.21 days by December 2024, after peaking at 80.80 days in December 2023.
Overall, the fluctuation in the cash conversion cycle indicates variability in the company's ability to efficiently manage its inventory, receivables, and payables, which can impact its liquidity and financial performance. It would be essential for Bristol-Myers Squibb to closely monitor and optimize its cash conversion cycle to ensure effective working capital management and sustainable growth in the future.