Gilead Sciences Inc (GILD)

The liquidity ratios of Gilead Sciences, Inc. have shown moderate fluctuation over the past five years.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has ranged from 1.27 to 1.43 during this period. While the current ratio increased from 1.27 in 2021 to 1.43 in 2023, indicating an improvement in the company's short-term liquidity position, it is still below the level observed in 2019. This suggests that Gilead Sciences may have slightly better short-term liquidity in 2023 compared to the previous two years.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Gilead Sciences' quick ratio has fluctuated between 1.13 and 1.27 over the past five years. Despite some variability, the quick ratio has generally remained above 1, indicating that the company has sufficient liquid assets to cover its short-term obligations without relying on inventory.

The cash ratio, which focuses solely on the most liquid assets, such as cash and cash equivalents, has ranged from 0.73 to 0.85 during the same period. Gilead Sciences' cash ratio, though showing some fluctuation, has stayed below the levels observed in 2019. This suggests that the company may have slightly less cash on hand relative to its current liabilities in 2023 compared to five years ago.

Overall, Gilead Sciences, Inc. maintains reasonable liquidity levels based on these ratios, with the current ratio and quick ratio generally above 1, indicating a healthy ability to meet short-term obligations. The variability in ratios over the years may reflect changes in the company's operating cycle and cash management strategies.

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See also:

Gilead Sciences Inc Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle for Gilead Sciences, Inc. has displayed fluctuating trends over the past five years. The cycle was highest in 2020 at 139.30 days, indicating that it took the company a relatively long time to convert its investments in inventory and other resources into cash inflows from sales. This could suggest potential inefficiencies in managing its working capital during that period.

In contrast, the cash conversion cycle improved significantly in 2019, decreasing to 74.56 days, which implies a shorter turnaround time from the initial investment to the realization of cash receipts. This improvement could reflect more streamlined operations and effective cash flow management by Gilead Sciences, Inc. during that year.

Subsequently, the cycle increased in 2021 and 2023, reaching 110.54 days and 132.21 days, respectively. These higher values may indicate a lengthening period in the company's cash conversion process, which could be attributed to various factors such as changes in sales terms, inventory management practices, or payment policies with suppliers and customers.

Overall, the fluctuating cash conversion cycle of Gilead Sciences, Inc. over the analyzed period suggests possible variations in the company's working capital management efficiency and operational effectiveness. Further analysis and investigation into the specific reasons behind these fluctuations could provide insights into the company's financial performance and potential areas for improvement in managing its cash conversion cycle.