Arrowhead Pharmaceuticals Inc (ARWR)

The liquidity ratios of Arrowhead Pharmaceuticals Inc. have shown consistent strength over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has been steadily increasing, reaching 3.98 in 2023 from 2.73 in 2019. This indicates that the company has a healthy level of current assets relative to its current liabilities.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has mirrored the trend of the current ratio, also standing at 3.98 in 2023. This suggests that Arrowhead Pharmaceuticals Inc. has a strong ability to cover its short-term obligations using its most liquid assets.

Similarly, the cash ratio, which focuses solely on the ability to cover liabilities with cash and cash equivalents, has remained high, reaching 3.98 in 2023. This indicates that the company has a substantial amount of readily available cash to settle its short-term obligations.

Overall, the consistent improvement in these liquidity ratios reflects Arrowhead Pharmaceuticals Inc.'s ability to meet its short-term financial commitments and indicates a strong financial position in terms of liquidity.

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Additional liquidity measure

The cash conversion cycle (CCC) is a measure of the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter CCC indicates a more efficient management of working capital.

Arrowhead Pharmaceuticals Inc.'s cash conversion cycle has fluctuated significantly over the past five years. In 2023, the company achieved a CCC of 0.00, indicating that it effectively minimized the time between paying suppliers and receiving cash from customers. This is a considerable improvement from the previous year's CCC of 2.12, showcasing enhanced efficiency in working capital management.

The substantial decrease in the CCC in 2023 compared to the higher CCC in 2021 and 2020 suggests that Arrowhead Pharmaceuticals Inc. has improved its inventory and receivables management, leading to quicker cash collection and reduced investment in working capital.

Overall, the trend in Arrowhead Pharmaceuticals Inc.'s cash conversion cycle indicates a positive trajectory and reflects the company's efforts to optimize its working capital efficiency, contributing to potential improvements in cash flow and liquidity.