Incyte Corporation (INCY)

Based on the provided data, Incyte Corporation's liquidity ratios indicate a strong ability to meet its short-term obligations. The current ratio, which measures the company's ability to cover its current liabilities with its current assets, shows a consistent trend above 3 from 2020 to 2023, indicating a healthy liquidity position. However, there was a slight decrease in 2024 to 1.97, which may raise concerns about the company's short-term liquidity.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Incyte Corporation's quick ratio shows a similar trend to the current ratio, remaining above 2 from 2020 to 2023, but dropping significantly to 1.31 in 2024. This decline suggests that the company may face challenges in quickly meeting its short-term obligations without relying on inventory.

The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover its current liabilities with its cash and cash equivalents alone. Incyte Corporation's cash ratio shows a consistent trend of around 2.75 to 2.95 from 2020 to 2023, signaling a strong cash position. However, like the current and quick ratios, there was a notable decrease to 1.31 in 2024, indicating a potential strain on the company's ability to meet its short-term liabilities with just cash on hand.

In summary, while Incyte Corporation has maintained sound liquidity ratios up to 2023, the significant decline in these ratios in 2024 suggests a potential liquidity challenge that may require attention. It is crucial for stakeholders to monitor the company's liquidity position closely and assess its ability to meet short-term obligations effectively.

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Additional liquidity measure

The cash conversion cycle of Incyte Corporation has shown fluctuations over the years based on the provided data.

As of December 31, 2020, the company had a negative cash conversion cycle of -228.85 days, indicating that it was efficiently managing its cash flow with a quicker turnover of inventory and receivables compared to its payables.

By December 31, 2021, the cash conversion cycle decreased further to -348.60 days, suggesting an improvement in the company's management of working capital and a more efficient cash conversion process.

However, by December 31, 2022, the cash conversion cycle increased to a negative value of -415.35 days, which may indicate a longer period required to convert inventory and receivables into cash, or delays in paying suppliers.

The following year, by December 31, 2023, the cash conversion cycle improved significantly to -66.75 days, showing that the company was able to efficiently manage its working capital and convert its assets into cash more effectively.

As of December 31, 2024, the cash conversion cycle was at -162.10 days, indicating a moderate improvement compared to the previous year, but still below the levels seen in 2021 and 2022.

Overall, Incyte Corporation has shown varying levels of efficiency in its cash conversion cycle over the years, with some fluctuations possibly influenced by changes in the company's operating cycle, working capital management strategies, or external economic factors.