Inspire Medical Systems Inc (INSP)

Inspire Medical Systems Inc's liquidity ratios have shown fluctuations over the years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, decreased from 13.02 in 2020 to 6.50 in 2021, and then gradually improved to 8.66 in 2022 before slightly decreasing to 7.60 in 2023 and 7.13 in 2024. Although the current ratio remains above 1, indicating a healthy liquidity position, the decreasing trend may signal a potential strain on short-term liquidity in recent years.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, followed a similar pattern. It decreased from 12.52 in 2020 to 6.02 in 2021, increased to 8.38 in 2022, then declined to 7.05 in 2023, and finally dropped to 6.09 in 2024. The quick ratio also suggests a decline in the company's ability to meet its short-term obligations without relying on inventory assets.

Furthermore, the cash ratio, which indicates how well a company can cover its short-term liabilities with its cash and cash equivalents, decreased from 11.31 in 2020 to 5.19 in 2021, then improved to 7.38 in 2022 before declining to 5.89 in 2023, and further dropping to 5.03 in 2024. This ratio shows that the company has a decreasing ability to settle its short-term obligations solely with its available cash resources.

In summary, while Inspire Medical Systems Inc maintains a generally healthy liquidity position, the decreasing trends in both the current ratio, quick ratio, and cash ratio over the years suggest a potential need for the company to closely monitor and manage its short-term liquidity position to ensure it can meet its financial obligations efficiently.

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Additional liquidity measure

Inspire Medical Systems Inc's cash conversion cycle has shown some fluctuations over the years. As of December 31, 2020, the company had a cash conversion cycle of 83.86 days, indicating that it takes approximately 83.86 days for the company to convert its investment in inventory to cash flows from sales.

By December 31, 2021, the cash conversion cycle had improved to 62.51 days, suggesting a more efficient management of inventory and sales.

In the following year, by December 31, 2022, the cash conversion cycle decreased further to 40.97 days, showing an even more streamlined process of converting inventory to sales and then to cash.

However, by December 31, 2023, the cash conversion cycle increased slightly to 49.23 days, indicating a potential slowdown in the company's cash conversion efficiency.

Finally, by December 31, 2024, the cash conversion cycle rose to 65.25 days, signaling a potential challenge in managing inventory and cash flows effectively.

Overall, while the company has shown fluctuations in its cash conversion cycle over the years, it is essential for Inspire Medical Systems Inc to continually monitor and improve its working capital management to ensure efficiency in converting inventory investments to cash inflows from sales.