Eli Lilly and Company (LLY)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.15 | 1.27 | 1.11 | 1.35 | 0.94 | 1.05 | 1.13 | 1.30 | 1.05 | 1.13 | 1.10 | 1.27 | 1.23 | 1.30 | 1.15 | 1.42 | 1.40 | 1.36 | 1.22 | 1.11 |
| Quick ratio | 0.59 | 0.63 | 0.61 | 0.68 | 0.52 | 0.58 | 0.63 | 0.79 | 0.53 | 0.71 | 0.67 | 0.77 | 0.70 | 0.79 | 0.67 | 0.83 | 0.77 | 0.79 | 0.68 | 0.64 |
| Cash ratio | 0.12 | 0.14 | 0.12 | 0.14 | 0.11 | 0.11 | 0.15 | 0.23 | 0.13 | 0.18 | 0.18 | 0.19 | 0.26 | 0.28 | 0.22 | 0.26 | 0.29 | 0.30 | 0.20 | 0.14 |
Eli Lilly and Company's liquidity ratios show fluctuating trends over the past few years. The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, has generally been above 1, indicating that the company has typically had enough current assets to meet its short-term obligations. However, the current ratio declined from 1.42 as of March 31, 2021, to 0.94 as of December 31, 2023, before improving to 1.15 as of June 30, 2024.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also displayed variability. This ratio decreased from 0.83 as of March 31, 2021, to 0.52 as of December 31, 2023, signaling a potential decrease in the company's ability to quickly cover its short-term liabilities with its most liquid assets. The quick ratio slightly recovered to 0.59 as of December 31, 2024.
The cash ratio, which is the most conservative liquidity measure as it only considers cash and cash equivalents, exhibited a similar pattern of fluctuations. The ratio fell from 0.30 as of September 30, 2020, to 0.11 as of December 31, 2023, indicating a significant decline in the company's ability to pay off its short-term obligations with its available cash. The cash ratio remained relatively low at 0.12 as of June 30, 2024.
Overall, while Eli Lilly and Company generally maintained current assets sufficient to cover its short-term liabilities, there were periods of decreased liquidity as evidenced by the declining quick and cash ratios. Monitoring these ratios is crucial for assessing the company's ability to handle financial obligations and manage liquidity effectively.
See also:
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 196.18 | 208.66 | 204.62 | 190.92 | 200.62 | 181.60 | 174.45 | 188.61 | 152.41 | 159.49 | 155.85 | 159.75 | 142.16 | 154.68 | 153.79 | 153.34 | 160.12 | 171.61 | 172.24 | 173.92 |
The cash conversion cycle of Eli Lilly and Company has exhibited fluctuating trends over the analyzed periods. The company's cash conversion cycle decreased from 173.92 days as of March 31, 2020, to 142.16 days by December 31, 2021, indicating an improvement in managing its operating cycle. However, there was a subsequent increase to 204.62 days by June 30, 2024, reflecting potential challenges in efficiently converting its investments in raw materials and other resources into cash inflows.
Overall, Eli Lilly and Company should focus on optimizing its working capital management to reduce the cash conversion cycle duration and enhance its liquidity position. Constant monitoring and strategic adjustments may be necessary to streamline the company's operational efficiencies and strengthen its cash flow generation capabilities.