Harmony Biosciences Holdings (HRMY)

Harmony Biosciences Holdings Inc has demonstrated a consistently strong liquidity position over the past four years based on its current ratio, quick ratio, and cash ratio.

The current ratio has shown a decreasing trend from 5.29 in 2021 to 2.75 in 2023. Despite the decline, the current ratio remains well above 1, indicating that the company's current assets continue to comfortably cover its current liabilities. This suggests that Harmony Biosciences Holdings Inc has the ability to meet its short-term obligations without difficulty.

Similarly, the quick ratio exhibits a similar trend, decreasing from 5.21 in 2021 to 2.72 in 2023. This ratio, which excludes inventory from current assets, provides a more conservative measure of liquidity. The fact that the quick ratio remains significantly above 1 further supports the company's strong ability to cover its short-term liabilities using its most liquid assets.

Furthermore, the cash ratio also demonstrates a decreasing trend from 4.56 in 2021 to 2.27 in 2023. While this ratio is the most stringent measure of liquidity as it only considers cash and cash equivalents, Harmony Biosciences Holdings Inc's cash ratio indicates a healthy level of cash reserves relative to its current liabilities.

In conclusion, the liquidity ratios of Harmony Biosciences Holdings Inc consistently show a strong financial position, with the company's ability to meet its short-term obligations improving steadily over the years.

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Additional liquidity measure

The cash conversion cycle of Harmony Biosciences Holdings Inc has shown a significant improvement over the past few years. In 2020, the company had a relatively long cash conversion cycle of 67.34 days, indicating that it took approximately two months to convert its investments in inventory and accounts receivable into cash.

However, the company managed to reduce this cycle considerably in subsequent years. By the end of 2021, Harmony Biosciences had lowered its cash conversion cycle to 64.19 days, demonstrating more efficient management of its working capital and faster conversion of sales into cash.

In 2022, the company made further improvements, achieving a cash conversion cycle of 47.87 days. This indicates that Harmony Biosciences was able to optimize its inventory turnover and accounts receivable collection, leading to a quicker cash conversion process.

By the end of 2023, Harmony Biosciences had significantly enhanced its cash conversion efficiency, with a cycle of only 9.26 days. This suggests that the company was able to effectively manage its working capital, streamline its operations, and convert its investments into cash at a much faster rate compared to previous years.

Overall, the trend of decreasing cash conversion cycle over the years for Harmony Biosciences indicates improved liquidity management, stronger operational efficiency, and potentially better financial health for the company.