Alkermes Plc (ALKS)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	457,469	292,473	337,544	272,961	203,771
Short-term investments	US$ in thousands	316,022	315,992	198,767	362,066	331,208
Total current liabilities	US$ in thousands	520,220	497,742	471,286	438,258	391,112
Cash ratio		1.49	1.22	1.14	1.45	1.37

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($457,469K + $316,022K) ÷ $520,220K
= 1.49

The cash ratio of Alkermes plc has shown some fluctuation over the past five years, ranging from 1.27 in 2021 to 1.68 in 2023. This ratio measures the company's ability to cover its short-term liabilities using only its cash and cash equivalents.

A higher cash ratio indicates that Alkermes plc has a greater ability to cover its short-term obligations with its readily available cash resources. In this case, the company's cash ratio reached its peak in 2023 at 1.68, suggesting a stronger liquidity position compared to previous years.

However, it is important to note that a very high cash ratio may also indicate that the company is not efficiently utilizing its cash resources to generate returns. Therefore, a balance is essential to ensure optimal liquidity management while also maximizing returns on investments.

Overall, Alkermes plc's cash ratio has generally been above 1 over the past five years, indicating a consistent ability to meet its short-term financial obligations with its cash holdings.