Danaher Corporation (DHR)
Quick ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 2,078,000 | 5,864,000 | 5,995,000 | 2,586,000 | 6,035,000 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Receivables | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 6,798,000 | 8,274,000 | 8,389,000 | 8,140,000 | 7,402,000 |
| Quick ratio | 0.31 | 0.71 | 0.71 | 0.32 | 0.82 |
December 31, 2024 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($2,078,000K
+ $—K
+ $—K)
÷ $6,798,000K
= 0.31
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets. Looking at Danaher Corporation's quick ratio over the past five years, we see fluctuations in its liquidity position.
As of December 31, 2020, the quick ratio stood at 0.82, indicating that Danaher had $0.82 in liquid assets available to cover each $1 of its short-term liabilities. This suggests a relatively strong liquidity position.
However, by December 31, 2021, the quick ratio had declined significantly to 0.32. Such a sharp decrease may raise concerns about the company's ability to meet its short-term obligations without relying on selling inventory or obtaining additional financing.
In the subsequent years, the quick ratio improved to 0.71 by both December 31, 2022, and December 31, 2023. This indicates a partial recovery in liquidity, but still below the level observed in 2020.
By December 31, 2024, the quick ratio decreased further to 0.31, reflecting a potential liquidity strain for Danaher. A quick ratio below 1 suggests that the company may face challenges in meeting its short-term obligations without difficulty.
In conclusion, the downward trend in Danaher Corporation's quick ratio over the years raises concerns about its liquidity position. Investors and stakeholders should closely monitor the company's ability to manage its short-term liabilities and evaluate the reasons behind the declining liquidity ratio.
Peer comparison
Dec 31, 2024