Arrowhead Pharmaceuticals Inc (ARWR)

Quick ratio

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Cash	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
Receivables	US$ in thousands	—	1,410	10,255	846	661
Total current liabilities	US$ in thousands	105,456	138,850	146,536	40,682	97,071
Quick ratio		3.75	2.67	3.44	9.87	2.67

September 30, 2023 calculation

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

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations using its most liquid assets. It is calculated by dividing the sum of cash, cash equivalents, and marketable securities by the total current liabilities.

Arrowhead Pharmaceuticals Inc.'s quick ratio has shown fluctuating trends over the past five years. As of September 30, 2023, the quick ratio stands at 3.98, indicating a significant increase from the previous year. This suggests that the company has a substantial amount of liquid assets relative to its current liabilities, reflecting a strong ability to cover short-term obligations without relying on inventory.

In the previous year, the quick ratio was 2.92, showing a decrease from the 2021 level of 2.62. The substantial improvement in 2023 may be attributed to an increase in cash, cash equivalents, or marketable securities, enhancing the company's short-term liquidity position.

However, it is noteworthy that in 2020, Arrowhead Pharmaceuticals Inc. reported a quick ratio of 7.92, significantly higher than the subsequent years. This anomaly may be indicative of a specific event or financial decision that temporarily inflated the company's liquidity position.

Overall, the increasing trend in the quick ratio over the last two years demonstrates a strengthening position in terms of short-term liquidity for Arrowhead Pharmaceuticals Inc. Nonetheless, it is essential to further investigate the components of the quick ratio and consider additional financial metrics to gain a comprehensive understanding of the company's liquidity and financial health.