Catalyst Pharmaceuticals Inc (CPRX)

Catalyst Pharmaceuticals Inc's liquidity ratios show a strong position in the earlier years, with a consistently high current ratio ranging from 7.00 in 2020 to 7.76 in 2021. This indicates the company's ability to cover its short-term obligations with its current assets. However, there is a notable decline in the current ratio in subsequent years, dropping to 5.57 in 2022, 2.88 in 2023, and then recovering slightly to 5.17 in 2024.

Looking at the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, we see a similar trend. The quick ratio also decreases over the years, from 6.16 in 2020 and 7.07 in 2021 to 1.81 in 2023 before improving to 4.29 in 2024.

The cash ratio mirrors the quick ratio, showing a decrease from 6.16 in 2020 and 7.07 in 2021 to 1.81 in 2023 before rising to 4.29 in 2024.

Overall, the declining trend in these liquidity ratios, particularly from 2022 to 2023, suggests potential challenges in meeting short-term obligations with current assets. It would be important for Catalyst Pharmaceuticals Inc to closely monitor and manage its liquidity position to ensure continued financial stability and ability to cover its short-term liabilities efficiently.

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Additional liquidity measure

The cash conversion cycle (CCC) of Catalyst Pharmaceuticals Inc has shown fluctuations over the years.

As of December 31, 2020, the CCC was 99.63 days, indicating that the company took approximately 100 days to convert its investments in inventory and accounts receivable into cash.

By December 31, 2021, the CCC increased to 131.26 days, suggesting a longer period to convert investments into cash compared to the previous year.

However, by December 31, 2022, there was a significant improvement with the CCC decreasing to 72.22 days, indicating a more efficient cash conversion process.

The trend continued to improve with the CCC further reducing to 67.55 days by December 31, 2023, showing the company's ability to manage its working capital effectively.

By December 31, 2024, the CCC increased again to 103.60 days, suggesting a slight setback in the cash conversion efficiency compared to the previous year.

Overall, the CCC trend reflects fluctuations in Catalyst Pharmaceuticals Inc's efficiency in managing its cash flow from operations, inventory, and receivables over the years. These fluctuations may be affected by various factors like changes in sales patterns, inventory management practices, and collection policies.