Arrowhead Pharmaceuticals Inc (ARWR)

Cash ratio

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Cash and cash equivalents	US$ in thousands	102,991	100,705	184,434	143,583	221,804
Short-term investments	US$ in thousands	292,700	268,391	310,083	256,929	36,900
Total current liabilities	US$ in thousands	105,456	138,850	146,536	40,682	97,071
Cash ratio		3.75	2.66	3.37	9.84	2.67

September 30, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($102,991K + $292,700K) ÷ $105,456K
= 3.75

The cash ratio measures a company's ability to cover its short-term liabilities with its available cash and cash equivalents. A higher cash ratio is generally preferred as it indicates a stronger ability to meet short-term obligations.

Looking at Arrowhead Pharmaceuticals Inc.'s cash ratio over the past five years, we observe fluctuations in the ratio. In 2023, the cash ratio stands at 3.98, indicating a substantial increase from the previous year. This suggests that the company has a significantly higher level of cash and cash equivalents relative to its short-term liabilities compared to the prior year.

In 2022, the cash ratio was 2.91, showing a lower level of liquidity compared to 2023 but still indicating a healthy ability to cover short-term obligations. However, in 2021, the ratio decreased further to 2.55, indicating a reduced ability to cover short-term liabilities with available cash compared to the previous year.

The significant spike in the cash ratio in 2020 to 7.90 reflects a substantial increase in the level of cash and cash equivalents relative to short-term liabilities. This suggests a robust liquidity position and the ability to comfortably meet short-term obligations.

In 2019, the cash ratio was 2.73, demonstrating a satisfactory ability to cover short-term liabilities with available cash.

In summary, Arrowhead Pharmaceuticals Inc.'s cash ratio has experienced fluctuations over the past five years. The substantial increase in the cash ratio in 2023 compared to the previous year indicates improved liquidity and a stronger ability to cover short-term obligations. It is important to assess the company's overall financial health comprehensively, considering other liquidity and solvency measures in conjunction with the cash ratio.