Zoetis Inc (ZTS)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.75 | 3.36 | 2.37 | 3.86 | 3.05 |
| Quick ratio | 0.99 | 1.80 | 1.54 | 2.60 | 2.15 |
| Cash ratio | 0.58 | 1.08 | 1.13 | 1.94 | 1.66 |
Zoetis Inc's liquidity ratios provide insight into the company's ability to meet its short-term obligations using its current assets.
1. Current Ratio: Zoetis Inc's current ratio has fluctuated over the years, indicating changes in its short-term liquidity position. The current ratio was 3.05 in 2020, indicating that the company had $3.05 in current assets for every $1 in current liabilities. This ratio improved to 3.86 in 2021, signaling a stronger liquidity position. However, there was a significant decrease in 2022, with a ratio of 2.37, which may raise concerns about the company's ability to cover its short-term liabilities. The current ratio improved again in 2023 to 3.36 but decreased to 1.75 in 2024, showing a potential liquidity strain.
2. Quick Ratio: Zoetis Inc's quick ratio, which is a stricter measure of liquidity as it excludes inventories, also experienced fluctuations. The quick ratio was 2.15 in 2020, increased to 2.60 in 2021, but dropped to 1.54 in 2022. This decline suggests that the company may have difficulty meeting its short-term obligations without relying on inventory. The ratio improved slightly to 1.80 in 2023 but dropped further to 0.99 in 2024, indicating a potential liquidity crunch.
3. Cash Ratio: The cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, also showed variations. Zoetis Inc had a cash ratio of 1.66 in 2020, increasing to 1.94 in 2021, but then dropping to 1.13 in 2022. This decrease may indicate a reduced ability to cover short-term obligations with cash on hand. The cash ratio further declined to 1.08 in 2023 and to 0.58 in 2024, suggesting a decreasing liquidity position over these years.
Overall, the analysis of Zoetis Inc's liquidity ratios reveals fluctuations in its short-term liquidity position, with some years showing stronger liquidity and others indicating potential challenges in meeting immediate obligations. It is important for stakeholders to monitor these ratios closely to assess the company's liquidity risk and 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 | 184.41 | 215.67 | 208.27 | 173.69 | 162.72 |
The cash conversion cycle of Zoetis Inc has shown fluctuating trends over the past five years. From December 31, 2020, to December 31, 2022, the cycle increased significantly from 162.72 days to 208.27 days. This indicates a lengthening time period required for the company to convert its investments in inventory and other resources into cash from sales.
However, in the subsequent years, there was a slight decrease in the cash conversion cycle with a drop to 215.67 days by December 31, 2023, and a further decline to 184.41 days by December 31, 2024. This improvement suggests that Zoetis Inc has been able to manage its working capital more effectively, resulting in a quicker conversion of inventory and accounts receivable into cash.
Overall, Zoetis Inc should continue to monitor its cash conversion cycle carefully to ensure efficient management of working capital and optimize its cash flow operations.