Eli Lilly and Company (LLY)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.15 | 0.94 | 1.05 | 1.23 | 1.40 |
| Quick ratio | 0.59 | 0.52 | 0.53 | 0.70 | 0.77 |
| Cash ratio | 0.12 | 0.11 | 0.13 | 0.26 | 0.29 |
Based on the provided data for Eli Lilly and Company, the current ratio has shown a declining trend over the years from 1.40 in December 2020 to 1.15 in December 2024. This indicates that the company may be experiencing some challenges in meeting its short-term obligations with its current assets.
Similarly, the quick ratio has also exhibited a downward trajectory, decreasing from 0.77 in December 2020 to 0.59 in December 2024. This ratio takes into account only the most liquid assets, suggesting that Eli Lilly's ability to cover its short-term liabilities with its most liquid assets has weakened over the years.
Furthermore, the cash ratio, which specifically measures the company's ability to cover its current liabilities with cash and cash equivalents, has also shown a decrease from 0.29 in December 2020 to 0.12 in December 2024. This decreasing trend implies that Eli Lilly's cash position may not be as strong as before in relation to its short-term obligations.
Overall, the declining current, quick, and cash ratios indicate a potential liquidity challenge for Eli Lilly and Company, as its ability to meet its short-term obligations with its current and liquid assets has weakened over the years. It would be important for the company to closely monitor its liquidity position and take appropriate measures to improve its short-term financial health.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 196.18 | 200.62 | 152.41 | 142.16 | 160.12 |
The cash conversion cycle of Eli Lilly and Company has fluctuated over the past five years. In 2020, the company's cash conversion cycle was 160.12 days, showing the time it takes for the company to convert its investments in inventory and other resources back into cash. In the following years, there was a trend of improvement as the cycle decreased to 142.16 days in 2021 and 152.41 days in 2022. However, there was a significant increase in 2023 and 2024, with the cycle reaching 200.62 days and 196.18 days, respectively.
A decreasing cash conversion cycle is generally seen as positive, indicating that the company is managing its inventory, accounts receivable, and accounts payable efficiently. However, the large increase in the cycle in 2023 and 2024 may indicate potential challenges in managing the company's working capital effectively. It would be important for Eli Lilly and Company to assess the reasons behind this increase and take appropriate steps to optimize its cash conversion cycle for better liquidity and financial performance.