Johnson & Johnson (JNJ)

Cash ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash and cash equivalents	US$ in thousands	24,105,000	21,859,000	12,889,000	14,487,000	13,985,000
Short-term investments	US$ in thousands	868,000	5,541,000	9,968,000	19,005,000	12,681,000
Total current liabilities	US$ in thousands	50,321,000	46,282,000	55,802,000	45,226,000	42,493,000
Cash ratio		0.50	0.59	0.41	0.74	0.63

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($24,105,000K + $868,000K) ÷ $50,321,000K
= 0.50

The cash ratio is a liquidity ratio that measures a company's ability to cover its short-term liabilities with its available cash and cash equivalents. It is calculated by dividing the cash and cash equivalents by the current liabilities.

Analyzing the cash ratio of Johnson & Johnson over the past five years, we observe the following trends:
- As of December 31, 2020, the cash ratio was 0.63, indicating that the company had $0.63 in cash and cash equivalents for every dollar of current liabilities.
- The ratio increased to 0.74 by December 31, 2021, suggesting an improvement in the company's liquidity position.
- However, by December 31, 2022, the cash ratio decreased to 0.41, which may raise concerns about the company's ability to meet its short-term obligations solely with its cash reserves.
- The ratio then rebounded to 0.59 by December 31, 2023, indicating a partial recovery in liquidity.
- By the end of December 31, 2024, the cash ratio stood at 0.50, showing a moderate level of liquidity compared to previous years.

Overall, fluctuations in the cash ratio of Johnson & Johnson suggest varying levels of liquidity over the years, with periods of improvement and decline. Investors and stakeholders should closely monitor these ratios to assess the company's ability to manage its short-term financial obligations effectively.