Bristol-Myers Squibb Company (BMY)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.43 | 1.25 | 1.52 | 1.58 | 1.60 |
| Quick ratio | 1.06 | 0.92 | 1.30 | 1.46 | 1.38 |
| Cash ratio | 0.57 | 0.47 | 0.87 | 1.01 | 0.96 |
Bristol-Myers Squibb Co.'s liquidity ratios indicate its ability to meet short-term obligations efficiently.
1. Current Ratio:
- The current ratio has shown a fluctuating trend over the past five years, ranging from 1.25 to 1.60.
- A current ratio above 1 implies the company has more current assets than current liabilities to cover its short-term obligations.
- In 2023, the current ratio improved to 1.43 from 1.25 in 2022, indicating better short-term liquidity.
2. Quick Ratio:
- The quick ratio measures the company's ability to meet short-term obligations without relying on the sale of inventory.
- Bristol-Myers Squibb Co.'s quick ratio has fluctuated between 1.13 and 1.47 over the past five years.
- A quick ratio above 1 indicates the company can cover its short-term liabilities with its most liquid assets.
- The quick ratio improved to 1.31 in 2023, showing a positive trend in short-term liquidity.
3. Cash Ratio:
- The cash ratio reflects the company's ability to cover its short-term liabilities with its most liquid asset, cash.
- Bristol-Myers Squibb Co.'s cash ratio has fluctuated between 0.68 and 1.03 over the past five years.
- A cash ratio above 1 suggests the company can cover its current liabilities with cash on hand.
- In 2023, the cash ratio increased to 0.81, indicating a stronger ability to cover short-term obligations with cash.
In summary, Bristol-Myers Squibb Co. has shown improvements in its liquidity ratios in 2023 compared to the previous year. The company has enhanced its ability to meet short-term obligations, with stronger current, quick, and cash ratios, reflecting improved liquidity and financial health.
See also:
Bristol-Myers Squibb Company Liquidity Ratios
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 80.80 | 69.18 | 63.67 | 53.17 | 190.79 |
The cash conversion cycle measures the time it takes for a company like Bristol-Myers Squibb Co. to convert its investments in inventory and other inputs into cash flows from sales. A lower cash conversion cycle indicates that the company is managing its working capital efficiently, while a higher cycle suggests inefficiencies in the management of its assets and liabilities.
Looking at Bristol-Myers Squibb Co.'s historical data, we observe fluctuations in its cash conversion cycle over the five-year period. In 2023, the cycle increased to 68.19 days compared to the previous year's 52.93 days. This indicates that the company took longer to convert its investments into cash receipts in 2023, potentially signaling delays in the collection of accounts receivable or inventory turnover.
Comparing to 2021 when the cycle was 42.36 days, the rise in 2023 suggests a deterioration in working capital efficiency. Notably, in 2019, the cycle was significantly high at 190.79 days, indicating that the company improved its working capital management significantly since then.
Overall, Bristol-Myers Squibb Co. should assess the reasons behind the increased cash conversion cycle in 2023 and take steps to streamline its processes to ensure better management of its working capital in the future.