Biogen Inc (BIIB)

Biogen Inc's liquidity ratios, including the current ratio, quick ratio, and cash ratio, provide insight into the company's ability to meet its short-term obligations.

1. Current Ratio:
- Biogen's current ratio has fluctuated over the past five years, ranging from 1.72 to 2.99. A current ratio of 2.00 in 2023 indicates that Biogen has $2.00 in current assets for every $1.00 in current liabilities.
- Generally, a current ratio above 1.0 is considered healthy, suggesting that Biogen has an adequate level of current assets to cover its current obligations.
- A decreasing trend from 2.99 in 2022 to 2.00 in 2023 may raise concerns about the company's ability to meet short-term obligations, although the ratio still remains above 1.0, indicating liquidity strength.

2. Quick Ratio:
- Biogen's quick ratio has also shown variability, ranging from 1.26 to 2.58 over the past five years. A quick ratio of 1.26 in 2023 indicates that the company has $1.26 in liquid assets available to cover each dollar of current liabilities.
- The quick ratio is considered a more stringent measure of liquidity than the current ratio, as it excludes inventory from current assets. A ratio above 1.0 is generally preferred, indicating a strong ability to meet short-term obligations without relying on inventory sales.
- A decrease in the quick ratio from 2.58 in 2022 to 1.26 in 2023 may suggest a reduced ability to cover immediate liabilities with liquid assets.

3. Cash Ratio:
- Biogen's cash ratio has fluctuated over the years, ranging from 0.65 to 1.93. A cash ratio of 0.65 in 2023 indicates that the company has $0.65 in cash and cash equivalents for every dollar of current liabilities.
- The cash ratio specifically measures the company's ability to cover short-term obligations with its most liquid assets, cash and cash equivalents.
- While Biogen's cash ratio has notably decreased from 1.93 in 2022 to 0.65 in 2023, the ratio above 0.50 generally signifies that the company has a solid cash position to meet its immediate payment obligations.

In conclusion, Biogen Inc's liquidity ratios demonstrate varying levels of liquidity over the years, with the current, quick, and cash ratios providing different perspectives on the company's ability to meet short-term financial commitments. Monitoring these ratios over time is essential to assess changes in the company's liquidity position and potential financial risks.

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See also:

Biogen Inc Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Biogen Inc has displayed an increasing trend over the past five years. From the end of 2019 to the end of 2021, there was a consistent upward trajectory in the cash conversion cycle, indicating a lengthening of the time it takes for the company to convert its investment in inventory into cash received from customers.

In 2020, the cash conversion cycle was 187.27 days, reflecting a slight increase from the previous year. However, by the end of 2021, the cycle had risen to 197.09 days, suggesting a notable extension in the collection period for accounts receivable and inventory turnover.

The trend continued in the following years, with the cash conversion cycle reaching 213.29 days by the end of 2022 and further increasing to 383.96 days by the end of 2023. This substantial rise in the cash conversion cycle over the last two years implies that Biogen Inc may be facing challenges in managing its working capital efficiently and converting its assets into cash effectively.

Overall, the increasing trend in the cash conversion cycle for Biogen Inc highlights the importance of closely monitoring the company's liquidity management and operational efficiency to ensure timely conversion of investments into cash flows.