Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
IQVIA Holdings Inc., liquidity ratios
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Current ratio | 0.89 | 0.91 | 1.12 | 1.05 | 1.10 | |
| Quick ratio | 0.76 | 0.77 | 0.95 | 0.88 | 0.94 | |
| Cash ratio | 0.23 | 0.28 | 0.42 | 0.23 | 0.27 |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The liquidity profile of the organization exhibits a period of relative stability and strength through 2020, followed by a distinct decline in short-term solvency metrics during the 2021 and 2022 fiscal years. The overall trend indicates a reduction in the cushion available to meet short-term obligations.
- Current Ratio
- The current ratio remained above 1.0 between 2018 and 2020, peaking at 1.12 in December 2020. However, a significant contraction occurred in 2021, where the ratio fell to 0.91, further decreasing to 0.89 by the end of 2022. This shift suggests that current liabilities have surpassed current assets, indicating a tighter liquidity position.
- Quick Ratio
- A similar trajectory is observed in the quick ratio, which peaked at 0.95 in 2020 before dropping sharply to 0.77 in 2021 and 0.76 in 2022. The close alignment between the current and quick ratio trends suggests that the decline in liquidity is not primarily driven by changes in inventory levels, but rather by broader movements in current assets or liabilities.
- Cash Ratio
- The cash ratio demonstrated higher volatility compared to the other liquidity metrics. After a decline from 0.27 in 2018 to 0.23 in 2019, there was a substantial increase to 0.42 in 2020. This spike was temporary, as the ratio reverted to 0.28 in 2021 and returned to 0.23 by the end of 2022, aligning with 2019 levels.
The convergence of these trends reveals a peak in liquidity during 2020, followed by a sustained deterioration. The fact that both the current and quick ratios have fallen below 1.0 indicates that the entity may rely more heavily on operational cash flow or external financing to cover its immediate liabilities as of December 31, 2022.
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Current Ratio
IQVIA Holdings Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 4,981) | 4,763) | 5,090) | 4,126) | 3,874) | |
| Current liabilities | 5,578) | 5,241) | 4,558) | 3,945) | 3,534) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 0.89 | 0.91 | 1.12 | 1.05 | 1.10 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| AbbVie Inc. | 0.96 | 0.79 | — | — | — | |
| Amgen Inc. | 1.41 | 1.59 | — | — | — | |
| Bristol-Myers Squibb Co. | 1.25 | 1.52 | — | — | — | |
| Danaher Corp. | 1.89 | 1.43 | — | — | — | |
| Eli Lilly & Co. | 1.05 | 1.23 | — | — | — | |
| Gilead Sciences Inc. | 1.29 | 1.27 | — | — | — | |
| Johnson & Johnson | 0.99 | 1.35 | — | — | — | |
| Merck & Co. Inc. | 1.47 | 1.27 | — | — | — | |
| Pfizer Inc. | 1.22 | 1.40 | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 5.06 | 3.56 | — | — | — | |
| Thermo Fisher Scientific Inc. | 1.48 | 1.50 | — | — | — | |
| Vertex Pharmaceuticals Inc. | 4.83 | 4.46 | — | — | — | |
| Current Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 1.30 | 1.36 | — | — | — | |
| Current Ratio, Industry | ||||||
| Health Care | 1.23 | 1.31 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Current ratio = Current assets ÷ Current liabilities
= 4,981 ÷ 5,578 = 0.89
2 Click competitor name to see calculations.
The liquidity position of the entity demonstrates a declining trend over the five-year period ending December 31, 2022. While current assets grew in absolute terms, the growth of current liabilities consistently outpaced asset accumulation, resulting in a contraction of the liquidity margin and a shift in the short-term solvency profile.
- Current Assets Trend
- Current assets grew from 3,874 million US$ in 2018 to 4,981 million US$ in 2022. A peak was observed in 2020 at 5,090 million US$, followed by a slight decline in 2021 before recovering in 2022.
- Current Liabilities Trend
- A consistent and uninterrupted upward trajectory is observed in current liabilities, which rose from 3,534 million US$ in 2018 to 5,578 million US$ by the end of 2022. This steady increase indicates a growing volume of short-term obligations.
- Current Ratio Analysis
- The current ratio remained above the 1.0 threshold between 2018 and 2020, peaking at 1.12 in 2020, indicating that the entity maintained sufficient short-term assets to cover its liabilities. However, a significant deterioration occurred in 2021, where the ratio dropped to 0.91, and further declined to 0.89 in 2022. This transition suggests that current liabilities now exceed current assets, potentially increasing the risk associated with meeting short-term financial obligations.
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Quick Ratio
IQVIA Holdings Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 1,216) | 1,366) | 1,814) | 837) | 891) | |
| Trade accounts receivable and unbilled services, net | 2,917) | 2,551) | 2,410) | 2,582) | 2,394) | |
| Investments in debt, equity and other securities | 93) | 111) | 88) | 62) | 47) | |
| Total quick assets | 4,226) | 4,028) | 4,312) | 3,481) | 3,332) | |
| Current liabilities | 5,578) | 5,241) | 4,558) | 3,945) | 3,534) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 0.76 | 0.77 | 0.95 | 0.88 | 0.94 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| AbbVie Inc. | 0.69 | 0.56 | — | — | — | |
| Amgen Inc. | 0.95 | 1.06 | — | — | — | |
| Bristol-Myers Squibb Co. | 0.87 | 1.20 | — | — | — | |
| Danaher Corp. | 1.30 | 0.89 | — | — | — | |
| Eli Lilly & Co. | 0.62 | 0.79 | — | — | — | |
| Gilead Sciences Inc. | 0.99 | 0.95 | — | — | — | |
| Johnson & Johnson | 0.71 | 1.04 | — | — | — | |
| Merck & Co. Inc. | 0.93 | 0.73 | — | — | — | |
| Pfizer Inc. | 0.80 | 1.00 | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 4.16 | 2.98 | — | — | — | |
| Thermo Fisher Scientific Inc. | 1.06 | 1.00 | — | — | — | |
| Vertex Pharmaceuticals Inc. | 4.46 | 4.04 | — | — | — | |
| Quick Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 0.91 | 0.98 | — | — | — | |
| Quick Ratio, Industry | ||||||
| Health Care | 0.93 | 1.00 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 4,226 ÷ 5,578 = 0.76
2 Click competitor name to see calculations.
The liquidity position of the organization demonstrates a general tightening over the five-year period from 2018 to 2022. While there was a notable peak in liquidity during 2020, the overall trajectory indicates a reduction in the ability to cover immediate short-term obligations using only the most liquid assets.
- Quick Ratio Trend
- The quick ratio exhibits a fluctuating but downward trend, moving from 0.94 in 2018 to 0.76 in 2022. A temporary recovery occurred in 2020, where the ratio reached its five-year peak of 0.95. However, a significant contraction followed in 2021 and 2022, with the ratio dropping to 0.77 and 0.76, respectively. This indicates a diminishing margin of safety regarding short-term solvency.
- Growth of Current Liabilities
- Current liabilities have experienced consistent and uninterrupted growth throughout the analyzed period. Obligations increased from US$ 3,534 million in 2018 to US$ 5,578 million by the end of 2022. This steady upward climb suggests a continuous increase in short-term funding requirements or a growing volume of short-term payables.
- Quick Asset Volatility
- Total quick assets have not grown as consistently as liabilities. Although assets increased from US$ 3,332 million in 2018 to US$ 4,226 million in 2022, the growth was non-linear. A substantial increase was recorded in 2020 (US$ 4,312 million), followed by a dip in 2021 (US$ 4,028 million) before recovering slightly in 2022. The inability of quick asset growth to keep pace with the rise in current liabilities is the primary driver behind the deteriorating quick ratio.
- Liquidity Interpretation
- Throughout the entire period, the quick ratio remained below 1.0, implying that quick assets were insufficient to cover all current liabilities without relying on the sale of inventory or other less liquid current assets. The decline to 0.76 by 2022 suggests an increased reliance on continuous cash flow or the restructuring of short-term debt to maintain operational stability.
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Cash Ratio
IQVIA Holdings Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 1,216) | 1,366) | 1,814) | 837) | 891) | |
| Investments in debt, equity and other securities | 93) | 111) | 88) | 62) | 47) | |
| Total cash assets | 1,309) | 1,477) | 1,902) | 899) | 938) | |
| Current liabilities | 5,578) | 5,241) | 4,558) | 3,945) | 3,534) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.23 | 0.28 | 0.42 | 0.23 | 0.27 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| AbbVie Inc. | 0.31 | 0.28 | — | — | — | |
| Amgen Inc. | 0.59 | 0.66 | — | — | — | |
| Bristol-Myers Squibb Co. | 0.42 | 0.78 | — | — | — | |
| Danaher Corp. | 0.71 | 0.32 | — | — | — | |
| Eli Lilly & Co. | 0.12 | 0.25 | — | — | — | |
| Gilead Sciences Inc. | 0.57 | 0.56 | — | — | — | |
| Johnson & Johnson | 0.42 | 0.70 | — | — | — | |
| Merck & Co. Inc. | 0.54 | 0.34 | — | — | — | |
| Pfizer Inc. | 0.54 | 0.73 | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 2.46 | 1.45 | — | — | — | |
| Thermo Fisher Scientific Inc. | 0.50 | 0.33 | — | — | — | |
| Vertex Pharmaceuticals Inc. | 3.93 | 3.51 | — | — | — | |
| Cash Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 0.52 | 0.58 | — | — | — | |
| Cash Ratio, Industry | ||||||
| Health Care | 0.54 | 0.60 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 1,309 ÷ 5,578 = 0.23
2 Click competitor name to see calculations.
The analysis of liquidity from 2018 to 2022 reveals a period of volatility in the cash ratio, influenced by a steady increase in short-term obligations and fluctuating cash reserves. While cash assets experienced a significant surge in 2020, the overall trajectory of the cash ratio indicates a return to lower liquidity levels by the end of the period.
- Cash Asset Volatility
- Total cash assets remained relatively stable between 2018 and 2019, followed by a sharp increase to 1,902 million US$ in 2020. Subsequently, a downward trend occurred, with assets decreasing to 1,309 million US$ by December 31, 2022.
- Current Liabilities Growth
- A consistent upward trajectory is observed in current liabilities, which rose from 3,534 million US$ in 2018 to 5,578 million US$ in 2022. This uninterrupted growth in short-term obligations has placed continuous pressure on the immediate liquidity position.
- Cash Ratio Performance
- The cash ratio exhibited a peak of 0.42 in 2020, coinciding with the surge in cash assets. However, the ratio declined over the following two years, reaching 0.23 by 2022. This final value represents a return to the low point observed in 2019, indicating that the increase in current liabilities has effectively offset the growth in cash assets relative to the 2018 baseline.
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