Gilead Sciences Inc (GILD)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.60 | 1.43 | 1.36 | 1.30 | 1.39 |
| Quick ratio | 0.96 | 0.64 | 0.57 | 0.56 | 0.65 |
| Cash ratio | 0.96 | 0.64 | 0.57 | 0.56 | 0.65 |
Gilead Sciences Inc's liquidity ratios show a relatively stable current ratio over the years, standing at 1.39 in 2020, declining slightly to 1.30 in 2021, and gradually increasing to 1.60 by the end of 2024. This indicates the company's ability to meet its short-term obligations using its current assets, with a higher ratio generally considered favorable.
However, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory, paints a slightly weaker picture. The quick ratio decreased from 0.65 in 2020 to 0.56 in 2021, and then gradually improved to 0.96 by the end of 2024. While the quick ratio shows a fluctuating trend, the latest value indicates an improvement in the company's ability to cover immediate liabilities without relying on inventory.
The cash ratio for Gilead Sciences Inc has followed a similar trend to the quick ratio, starting at 0.65 in 2020, declining to 0.56 in 2021, and then gradually increasing to 0.96 by the end of 2024. This ratio reflects the firm's ability to pay off its current liabilities with cash and cash equivalents alone.
Overall, Gilead Sciences Inc's liquidity ratios suggest that the company has maintained a prudent liquidity position over the years, with a solid current ratio and improving quick and cash ratios. This indicates that the company has sufficient short-term assets to cover its immediate obligations, which is essential for financial stability and operational flexibility.
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Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 99.85 | 112.38 | 181.95 | 151.18 | 240.62 |
The cash conversion cycle of Gilead Sciences Inc has shown a fluctuating trend over the past five years. At the end of December 2020, the company had a cash conversion cycle of 240.62 days, indicating that it took over 8 months to convert its investments in inventory back into cash.
However, by the end of December 2024, Gilead Sciences Inc was able to significantly improve its cash conversion cycle to 99.85 days, reflecting a more efficient management of working capital. This suggests that the company has been able to streamline its operations and optimize its inventory and accounts receivable management.
The decreasing trend in the cash conversion cycle signifies that Gilead Sciences Inc has been able to enhance its operational efficiency and liquidity management, allowing the company to convert its resources into cash more rapidly.
Overall, the improvement in the cash conversion cycle over the years demonstrates Gilead Sciences Inc's focus on enhancing its working capital management and operational effectiveness.