The first issue which the company is currently facing is associated with vulnerabilities in defibrillators, which, if exploited, may alter the functioning of the devices and cause harm to patients. It has been found that Implantable Cardioverter Defibrillators and Cardiac Synchronized Therapy Defibrillators have improper authentication algorithms that may be compromised by a third party, as well as improper restriction of power consumption. Such restriction may allow an attacker to send a number of commands to the device to reduce the battery lifetime. The given problem has been identified by the US Food and Drug Administration, which released a safety communication suggesting appropriate mitigation of vulnerabilities.2 It has been recommended that the company evaluate the detected shortcomings within its operational use and consider the given recommendations to mitigate problems. Even though Abbott Laboratories developed updated firmware to address the identified risks, it is possible that firmware updates may cause devices to function improperly. At the same time, if healthcare professionals and patients decide to use Cardioverter Defibrillators and Cardiac Synchronized Therapy Defibrillators, they will have to disable the function of remote monitoring.
The second issue is the decreased sales for the fourth quarter of the fiscal year 2018, compared to the sales for the fourth quarter of the fiscal year 2017. This problem has been developed personally upon a thorough investigation of the company’s financial statements. Despite continued growth at medical devices and diagnostics units, Nutrition sales decreased by 0.4%, from $1,848 million in the fourth quarter of 2017 to $1,777 million in the fourth quarter of 2018.1 Established Pharmaceuticals sales decreased by 4.8%, from $1,142 million in the fourth quarter of 2017 to $1,090 million in the fourth quarter of 2018. Upon further examination of the financial data, it has been identified that Nutrition Adult sales decreased by 2.5%, from $783.1 million in the fourth quarter of 2017 to $764 million in the fourth quarter of 2018. At the same time, Nutrition Pediatric sales experienced an increase of 1.2%. One of the reasons for a decrease in sales is the unfavorable exchange rate for international sales. The identified issue adversely impacted the company’s balance sheet, income statement, and statement of cash flows as the total net income decreased.
The third issue is the company’s ability to pay its obligations based on the value of the current ratio. This problem has been identified personally upon the investigation of Abbott Laboratories’ balance sheet. In 2018, the current ratio for the company was equal to 1.62, given that total current assets were equal to $14,632 million, and total current liabilities were equal to $9,012 million. In 2017, the current ratio for the company was equal to 2.26, given that total current assets were equal to $20.147 million, and total current liabilities were equal to $8.912 million. Since the value of the current ratio is greater than 1.0, one may note that the company’s current assets exceed its current liabilities, which means that Abbott Laboratories is not expected to have problems meeting its short-term obligations in 2019. In other words, the company has enough current assets to cover its current liabilities. However, a significant decrease in the current ratio may speak of a decrease in the number of liquid assets, such as cash and cash equivalents, and, consequently, Abbott’s decreased ability to pay its short-term obligations.
Works Cited
Abbott Laboratories. “2018 Annual report.”AbbottInvestor, 2018, Web.
US Department of Homeland Security. “Abbott Laboratories Defibrillator.”CISA. 2018, Web.
Notes
- Abbott Laboratories, “2018 Annual Report,” AbbottInvestor, 2018, Web.
- US Department of Homeland Security, “Abbott Laboratories Defibrillator,” CISA, 2018, Web.