Zoetis Inc (ZTS)
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 | 1.75 | 3.69 | 3.45 | 3.33 | 3.36 | 3.87 | 3.50 | 3.27 | 2.37 | 2.27 | 2.18 | 2.25 | 3.86 | 4.54 | 3.37 | 3.29 | 3.05 | 2.82 | 3.47 | 2.77 |
| Quick ratio | 0.99 | 1.84 | 1.65 | 1.71 | 1.80 | 1.87 | 1.72 | 1.72 | 1.54 | 1.32 | 1.33 | 1.44 | 2.60 | 3.01 | 2.31 | 2.29 | 2.15 | 1.94 | 2.39 | 1.69 |
| Cash ratio | 0.58 | 1.01 | 0.88 | 1.03 | 1.08 | 1.09 | 0.97 | 1.10 | 1.13 | 0.91 | 0.90 | 1.03 | 1.94 | 2.23 | 1.75 | 1.74 | 1.66 | 1.52 | 1.85 | 1.13 |
Zoetis Inc's liquidity ratios provide insights into the company's ability to meet its short-term obligations.
1. Current Ratio: This ratio measures the company's ability to cover its short-term liabilities with its short-term assets. Zoetis Inc's current ratio has fluctuated over the years, ranging from a low of 1.75 to a high of 4.54. Generally, a current ratio above 1 indicates the company can pay off its current liabilities with its current assets. Zoetis Inc's current ratio has remained above 2 for most periods, indicating a strong ability to meet short-term obligations.
2. Quick Ratio: Also known as the Acid-Test ratio, the quick ratio provides a more stringent measure of liquidity by excluding inventories from current assets. Zoetis Inc's quick ratio has varied between 0.99 and 3.01. A quick ratio above 1 suggests that the company can meet its immediate liabilities without relying on selling inventory. Zoetis Inc's quick ratio indicates a good level of liquidity, with values consistently above 1.
3. Cash Ratio: The cash ratio is the most conservative liquidity ratio, focusing solely on the company's cash and cash equivalents compared to its current liabilities. Zoetis Inc's cash ratio has ranged from 0.58 to 2.23, with higher values indicating a stronger ability to cover short-term liabilities with cash on hand. The company has maintained a healthy cash ratio over the periods analyzed, suggesting a sufficient level of cash reserves to meet its short-term obligations.
In conclusion, Zoetis Inc has demonstrated strong liquidity positions based on its current, quick, and cash ratios. The company's ability to fulfill its short-term commitments appears robust, with consistent ratios above industry benchmarks. However, the downward trend in some ratios towards the end of the analysis period may warrant further monitoring to ensure continued liquidity strength.
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 | 185.35 | 197.01 | 201.17 | 216.37 | 216.49 | 231.64 | 228.79 | 216.82 | 208.56 | 203.54 | 196.76 | 187.42 | 174.83 | 176.01 | 177.03 | 176.88 | 162.93 | 173.10 | 174.30 | 171.33 |
The cash conversion cycle for Zoetis Inc has shown fluctuations over the years. The cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
From March 31, 2020, to December 31, 2020, Zoetis Inc managed to reduce its cash conversion cycle from 171.33 days to 162.93 days, indicating an improvement in efficiency in managing inventory and collecting receivables. However, from March 31, 2021, the cycle started increasing again, reaching 228.79 days by June 30, 2023.
The increasing trend in the cash conversion cycle from March 31, 2021, onwards suggests a potential concern in the company's liquidity management. This could be due to factors such as longer inventory holding periods, delayed collection of receivables, or extended payment cycles to suppliers.
As of December 31, 2024, Zoetis Inc managed to bring down its cash conversion cycle to 185.35 days, showing efforts to improve operational efficiency and working capital management. However, it is essential for the company to closely monitor and address the factors contributing to the fluctuations in the cash conversion cycle to maintain healthy liquidity levels and sustainable operations.