Harmony Biosciences Holdings (HRMY)

Quick ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash	US$ in thousands	311,660	243,784	234,309	228,631
Short-term investments	US$ in thousands	41,800	79,331	—	—
Receivables	US$ in thousands	74,140	54,740	34,843	22,176
Total current liabilities	US$ in thousands	163,781	78,884	53,775	134,539
Quick ratio		2.61	4.79	5.01	1.86

December 31, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($311,660K + $41,800K + $74,140K) ÷ $163,781K
= 2.61

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets. A higher quick ratio indicates a better ability to cover short-term liabilities.

Analyzing Harmony Biosciences Holdings Inc's quick ratio over the past four years shows a fluctuating trend.

In 2023, the quick ratio stands at 2.72, indicating a decrease from the previous year. This may suggest a slightly reduced ability to cover short-term obligations with liquid assets compared to 2022.

In 2022, the quick ratio was 5.02, reflecting a significant increase from 2021. A quick ratio above 1 typically indicates a company can meet its short-term liabilities with its most liquid assets, and a ratio of 5.02 suggests Harmony Biosciences Holdings Inc had a strong liquidity position in 2022.

Similarly, in 2021, the quick ratio was 5.21, marking a slight decline from the previous year. Despite the decrease, Harmony Biosciences Holdings Inc continued to showcase a robust ability to cover short-term obligations with its liquid assets.

In 2020, the quick ratio was 1.93, indicating a lower ability to meet short-term liabilities with liquid assets compared to the following years. This could signal a potential liquidity challenge in 2020.

Overall, Harmony Biosciences Holdings Inc's quick ratio has shown fluctuations over the past four years, with 2022 standing out as a year of strong liquidity position based on the quick ratio metric. Management should further analyze the components of the quick ratio to understand the reasons behind the fluctuations and ensure the company maintains a healthy liquidity position.