Certara Inc (CERT)
Liquidity ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 2.62 | 3.51 | 3.43 | 3.71 | 3.32 | 3.99 | 3.51 | 3.37 | 2.98 |
| Quick ratio | 2.46 | 3.31 | 3.25 | 3.53 | 3.14 | 3.77 | 3.30 | 3.15 | 2.77 |
| Cash ratio | 1.81 | 2.58 | 2.44 | 2.65 | 2.34 | 2.80 | 2.40 | 2.26 | 2.01 |
Based on the provided data for Certara Inc's liquidity ratios, we can observe the following trends:
1. Current ratio:
- The current ratio measures the company's ability to cover its short-term obligations with its current assets. Certara Inc's current ratio has been consistently above 2.0, indicating a healthy liquidity position.
- The ratio ranges from a low of 3.32 in Q4 2022 to a high of 3.71 in Q1 2023. This shows a stable and favorable trend in the company's ability to meet its short-term obligations.
2. Quick ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Certara Inc's quick ratio follows a similar trend to the current ratio, staying consistently above 2.0.
- The quick ratio ranges from 3.29 in Q4 2022 to 3.68 in Q1 2023, indicating the company's ability to cover its short-term liabilities without relying on inventory.
3. Cash ratio:
- The cash ratio is the most conservative liquidity measure, focusing only on the most liquid assets, which are cash and cash equivalents. Certara Inc's cash ratio has also been above 1.0 across all periods, indicating a strong ability to cover short-term obligations with cash on hand.
- The cash ratio ranges from 2.41 in Q1 2022 to 2.78 in Q1 2023, demonstrating a consistent and stable position in terms of holding sufficient cash reserves.
In summary, Certara Inc maintains a strong liquidity position as evidenced by its current, quick, and cash ratios consistently exceeding commonly accepted benchmarks. This suggests that the company has the ability to meet its short-term obligations and indicates financial stability and efficiency in managing its working capital.
Additional liquidity measure
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 80.29 | 105.40 | 89.96 | 88.64 | 81.88 | 116.41 | 109.92 | 103.07 | 69.74 |
The cash conversion cycle for Certara Inc fluctuated over the past eight quarters, ranging from a low of 67.21 days in Q3 2023 to a high of 78.51 days in Q3 2022. This metric indicates the average number of days it takes for the company to convert its resources invested in operations into cash inflows.
A lower cash conversion cycle is generally seen as more favorable as it reflects efficient management of working capital and faster conversion of inventory and receivables into cash. On the other hand, a higher cash conversion cycle may indicate inefficiencies in managing working capital, potentially leading to cash flow challenges.
Overall, Certara Inc should aim to continually monitor and optimize its cash conversion cycle to improve its liquidity and operational efficiency.