Harmony Biosciences Holdings (HRMY)

Based on the provided data, Harmony Biosciences Holdings' liquidity ratios show a generally positive trend over the years under consideration.

1. Current Ratio: The current ratio measures the company's ability to cover its short-term obligations with its current assets. Harmony Biosciences Holdings has shown a significant improvement in its current ratio from 1.95 in December 2020 to 3.31 in December 2024, indicating that the company has a higher level of current assets relative to its current liabilities in the most recent year.

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. Harmony Biosciences Holdings' quick ratio has also demonstrated a positive trend, increasing from 1.86 in December 2020 to 3.14 in December 2024. This indicates the company's ability to cover its short-term liabilities with its most liquid assets has improved over the years.

3. Cash Ratio: The cash ratio focuses solely on a company's ability to cover its current liabilities with cash and cash equivalents. Harmony Biosciences Holdings has maintained a strong cash position, with the cash ratio increasing from 1.70 in December 2020 to 2.67 in December 2024. This suggests that the company has a sufficient level of cash to meet its short-term obligations.

Overall, the liquidity ratios of Harmony Biosciences Holdings have shown a positive trend, indicating an improvement in the company's ability to meet its short-term financial obligations and manage liquidity effectively. These ratios reflect a healthy liquidity position and suggest that the company is well-positioned to address any short-term financial needs that may arise.

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Additional liquidity measure

The cash conversion cycle of Harmony Biosciences Holdings has shown a downward trend over the years, indicating improvements in the efficiency of their working capital management. As of December 31, 2020, the cash conversion cycle stood at 63.57 days, and by December 31, 2024, this figure had decreased to 36.46 days.

A lower cash conversion cycle suggests that the company is taking less time to convert its investments in inventory and receivables into cash from sales. This can be attributed to better inventory management, faster collection of receivables, and/or elongation of payment terms to suppliers.

Overall, the decreasing trend in the cash conversion cycle reflects improved liquidity and operational efficiency for Harmony Biosciences Holdings, enabling them to potentially optimize their cash flows and working capital usage in a more effective manner.