Johnson & Johnson (JNJ)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.11 | 1.16 | 0.99 | 1.35 | 1.21 |
| Quick ratio | 0.79 | 0.91 | 0.70 | 1.08 | 0.95 |
| Cash ratio | 0.50 | 0.59 | 0.41 | 0.74 | 0.63 |
Johnson & Johnson's liquidity ratios show the following trends over the past five years:
1. Current Ratio:
- The current ratio has fluctuated over the years but generally indicates the company's ability to meet its short-term obligations.
- It increased from 1.21 in 2020 to 1.35 in 2021, suggesting improved liquidity.
- However, there was a decrease to 0.99 in 2022, indicating potential challenges in meeting current liabilities.
- The ratio recovered to 1.16 in 2023 and slightly dropped to 1.11 in 2024.
2. Quick Ratio:
- The quick ratio measures the company's ability to meet short-term obligations without relying on inventory.
- Johnson & Johnson saw an increase in the quick ratio from 0.95 in 2020 to 1.08 in 2021, showing improved liquidity.
- However, the ratio dropped to 0.70 in 2022, indicating a potential liquidity strain without relying on inventory.
- It improved slightly to 0.91 in 2023 but decreased to 0.79 in 2024.
3. Cash Ratio:
- The cash ratio reflects the company's ability to cover immediate liabilities with its cash and cash equivalents.
- Johnson & Johnson's cash ratio has been relatively stable compared to the other liquidity ratios.
- It increased from 0.63 in 2020 to 0.74 in 2021, indicating a stronger position to cover short-term obligations.
- However, the ratio decreased to 0.41 in 2022, suggesting a potential decrease in the ability to cover immediate liabilities.
- It then improved to 0.59 in 2023 and remained stable at 0.50 in 2024.
Overall, Johnson & Johnson's liquidity ratios have shown some fluctuations, with improvements in certain years but potential challenges in others. Investors and stakeholders should continue to monitor these ratios to assess the company's ability to manage its short-term financial obligations 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 | 75.17 | 75.01 | 77.00 | 55.72 | 59.25 |
The cash conversion cycle of Johnson & Johnson has shown fluctuations over the years. In 2020, the company's cash conversion cycle was 59.25 days, which improved to 55.72 days in 2021, indicating a more efficient management of working capital. However, in 2022, there was a significant increase to 77.00 days, which suggests a lengthening in the time it takes to convert inventory into cash.
The trend continued in 2023, with the cash conversion cycle remaining high at 75.01 days. This indicates that Johnson & Johnson may be facing challenges in efficiently managing its inventory, receivables, and payables. In 2024, the cash conversion cycle remained elevated at 75.17 days, indicating that the company still needs to focus on optimizing its working capital management.
Overall, the upward trend in the cash conversion cycle over the years signals a potential inefficiency in Johnson & Johnson's working capital management, requiring closer attention to improve cash flow and operational efficiency.