Boston Scientific Corp (BSX)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.08 | 1.32 | 1.51 | 1.48 | 1.82 |
| Quick ratio | 0.06 | 0.18 | 0.24 | 0.45 | 0.47 |
| Cash ratio | 0.06 | 0.18 | 0.24 | 0.45 | 0.47 |
Based on the provided data, we can analyze the liquidity ratios of Boston Scientific Corp over the years.
1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets. A higher ratio indicates better liquidity.
- Boston Scientific Corp's current ratio has fluctuated over the years, decreasing from 1.82 in 2020 to 1.08 in 2024.
- While the current ratio has generally remained above 1, indicating that the company has sufficient current assets to cover its current liabilities, the downward trend suggests a potential liquidity challenge.
2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, excludes inventory from current assets to provide a more stringent measure of liquidity.
- Boston Scientific Corp's quick ratio has also shown a declining trend, falling from 0.47 in 2020 to 0.06 in 2024.
- The decreasing quick ratio indicates that the company may struggle to meet its short-term obligations using its most liquid assets.
3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, as it only considers cash and cash equivalents as current assets.
- Boston Scientific Corp's cash ratio exhibited a similar downward trajectory, declining from 0.47 in 2020 to 0.06 in 2024.
- The decreasing cash ratio implies that the company's ability to meet its short-term obligations solely with cash has weakened over the years.
Overall, the liquidity ratios of Boston Scientific Corp suggest a deterioration in its short-term liquidity position from 2020 to 2024. The declining trend in current, quick, and cash ratios indicates a potential risk in fulfilling immediate financial obligations without sufficient liquid assets. Further analysis and proactive management of working capital may be necessary to address these liquidity challenges 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 | 195.10 | 208.67 | 170.24 | 156.29 | 140.49 |
The cash conversion cycle of Boston Scientific Corp has shown an increasing trend over the years, rising from 140.49 days as of December 31, 2020, to 195.10 days as of December 31, 2024. This indicates that the company is taking longer to convert its investments in inventory and accounts receivable into cash.
The increase in the cash conversion cycle may suggest inefficiencies in managing working capital, possibly due to issues in inventory management or slower collection of accounts receivable. A longer cash conversion cycle can tie up cash resources and negatively impact liquidity and overall financial performance.
It is essential for Boston Scientific Corp to closely monitor and address the factors contributing to the prolonged cash conversion cycle to improve cash flow efficiency and maintain financial health. Implementing strategies to streamline operations, optimize inventory levels, and enhance receivables management could help reduce the cash conversion cycle and strengthen the company's cash position in the long run.