Amphastar P (AMPH)

Cash ratio

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Cash and cash equivalents	US$ in thousands	144,296	266,778	148,595	176,615	156,098	157,244	166,157	172,627	126,353	106,610	105,432	101,601	92,642	87,910	87,388	54,845	73,685	85,611	120,373	79,096
Short-term investments	US$ in thousands	112,510	33,098	14,541	16,277	19,664	26,843	17,234	14,383	10,320	8,021	11,745	13,531	12,977	10,873	11,101	12,203	11,675	12,666	2,836	2,834
Total current liabilities	US$ in thousands	225,407	257,963	251,285	105,635	94,862	102,190	103,634	114,364	103,810	97,989	124,549	127,096	112,201	96,717	93,286	83,371	90,009	86,596	100,999	111,959
Cash ratio		1.14	1.16	0.65	1.83	1.85	1.80	1.77	1.64	1.32	1.17	0.94	0.91	0.94	1.02	1.06	0.80	0.95	1.13	1.22	0.73

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($144,296K + $112,510K) ÷ $225,407K
= 1.14

The cash ratio measures a company's ability to cover its short-term liabilities with its available cash and cash equivalents. It is calculated by dividing cash and cash equivalents by current liabilities.

Analyzing the cash ratio of Amphastar Pharmaceuticals Inc over the past eight quarters, we observe fluctuations in the ratio. In Q1 2023, the cash ratio was notably high at 1.90, indicating the company had a sufficient amount of cash to cover its current liabilities. However, in Q2 2023, there was a significant drop in the cash ratio to 0.68, which suggests a potential liquidity strain as the available cash decreased relative to current liabilities.

Throughout the remaining quarters, the cash ratio displayed some volatility but generally remained above 1.0, indicating a solid ability to meet short-term obligations with cash on hand.

It is essential to note that the ideal cash ratio varies by industry and company circumstances. A ratio above 1.0 signifies that a company can cover all of its current liabilities with cash and cash equivalents, highlighting financial stability. Conversely, a ratio below 1.0 may indicate liquidity challenges, necessitating the need to either increase cash reserves or manage liabilities more effectively.

Therefore, while the cash ratio of Amphastar Pharmaceuticals Inc has shown fluctuations, the company has generally maintained a healthy liquidity position, ensuring it can meet its short-term obligations with its available cash and liquid assets.