Pfizer Inc (PFE)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.17 | 0.91 | 1.22 | 1.40 | 1.35 |
| Quick ratio | 0.48 | 0.27 | 0.54 | 0.73 | 0.47 |
| Cash ratio | 0.48 | 0.27 | 0.54 | 0.73 | 0.47 |
Based on the data provided, we can analyze the liquidity ratios of Pfizer Inc over the past five years.
1. Current Ratio:
- The current ratio measures the company's ability to meet its short-term obligations with its current assets.
- Pfizer's current ratio has fluctuated over the years, starting at 1.35 in 2020, increasing to 1.40 in 2021, but then decreasing to 1.22 in 2022, 0.91 in 2023, and rising again to 1.17 in 2024.
- Generally, a current ratio greater than 1 indicates that Pfizer has more current assets than current liabilities, which is a positive sign for short-term liquidity.
2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of a company's liquidity by excluding inventory from current assets.
- Pfizer's quick ratio has also shown variability, starting at 0.47 in 2020, increasing to 0.73 in 2021, declining to 0.54 in 2022, dropping significantly to 0.27 in 2023, and then recovering slightly to 0.48 in 2024.
- A quick ratio below 1 suggests that Pfizer may have difficulty meeting its short-term obligations without relying on selling inventory.
3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio as it only considers cash and cash equivalents.
- Pfizer's cash ratio has followed a similar pattern to the quick ratio, starting at 0.47 in 2020, increasing to 0.73 in 2021, decreasing to 0.54 in 2022, falling to 0.27 in 2023, and then rebounding to 0.48 in 2024.
- A cash ratio below 1 indicates that Pfizer may have limited cash on hand to cover its short-term liabilities.
In summary, Pfizer's liquidity ratios have shown fluctuations over the years, with the current ratio generally above 1, indicating a reasonable ability to cover short-term obligations. However, the quick and cash ratios have at times fallen below 1, suggesting potential challenges in meeting immediate liquidity needs without relying on selling inventory or increasing cash reserves. Further analysis of Pfizer's cash management practices and working capital management may provide additional insights into its liquidity position.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 241.21 | 125.27 | 95.45 | 107.28 | 337.87 |
The cash conversion cycle of Pfizer Inc has exhibited fluctuations over the past five years. As of December 31, 2020, the cycle stood at 337.87 days, indicating a lengthy period for the company to convert its resources into cash. However, there has been a significant improvement observed in subsequent years. By December 31, 2022, Pfizer had reduced its cash conversion cycle to 95.45 days, reflecting a more efficient management of working capital and quicker conversion of inventory and receivables into cash.
The downward trend continued into December 31, 2023, with the cycle decreasing to 125.27 days, before experiencing a slight increase to 241.21 days by December 31, 2024. Although the cycle lengthened in the final year compared to the preceding one, the overall trend still indicates progress in streamlining Pfizer's cash conversion process.
It is essential for Pfizer Inc to continue monitoring and managing its cash conversion cycle effectively to ensure optimal utilization of resources and maintain healthy liquidity levels.