Amphastar P (AMPH)

Amphastar P's liquidity ratios demonstrate a generally positive trend over the years, indicating the company's ability to meet its short-term obligations efficiently.

1. Current Ratio:
- The current ratio, which measures the company's ability to cover current liabilities with current assets, increased from 2.49 in 2020 to 3.07 in 2024.
- This improvement suggests that Amphastar P has strengthened its liquidity position and can more comfortably settle its short-term debts.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, focuses on the company's ability to pay off current liabilities without relying on inventory.
- It also shows an upward trend, rising from 1.53 in 2020 to 2.06 in 2024, indicating the company's enhanced ability to meet immediate financial obligations using its most liquid assets.

3. Cash Ratio:
- The cash ratio, which is the most stringent liquidity measure as it assesses the company's ability to cover current liabilities using only cash and cash equivalents, has also improved from 0.94 in 2020 to 1.28 in 2024.
- This suggests that Amphastar P has increased its cash reserves relative to its short-term liabilities, strengthening its financial health.

Overall, the consistent growth in all three liquidity ratios reflects positively on Amphastar P's liquidity management and suggests that the company has a strong financial foundation to support its short-term operations and obligations.

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Additional liquidity measure

The cash conversion cycle of Amphastar P has shown fluctuations over the past few years. In December 2020, the company had a cash conversion cycle of 196.96 days, indicating that it took almost six and a half months to convert its investments in inventory and other resources back into cash.

By the end of December 2021, the cash conversion cycle decreased to 173.95 days, suggesting an improvement in the company's efficiency in managing its working capital and converting it into cash.

However, in December 2022, there was a slight increase in the cash conversion cycle to 186.20 days, which could indicate some challenges in managing inventory, receivables, and payables effectively.

In December 2023, there was a significant reduction in the cash conversion cycle to 165.16 days, indicating that the company improved its working capital management practices and accelerated its cash conversion process.

By December 2024, the cash conversion cycle increased again to 193.56 days, possibly due to changes in operational or economic conditions impacting the company's ability to efficiently convert its resources into cash.

Overall, the trend in the cash conversion cycle of Amphastar P shows varying levels of efficiency in managing its working capital and cash flow over the years, with some improvements and fluctuations observed. Monitoring and analyzing these metrics can provide valuable insights into the company's liquidity and operational effectiveness.