Inspire Medical Systems Inc (INSP)

Inspire Medical Systems Inc has demonstrated strong liquidity position over the last five years based on its liquidity ratios. The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, has been consistently high, ranging from 6.50 to 13.02. This indicates that the company has ample current assets to meet its short-term obligations.

Similarly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also shown a stable and strong trend, ranging from 6.02 to 12.52. This suggests that even without considering inventory, the company has sufficient liquid assets to cover its short-term liabilities.

Furthermore, the cash ratio, which focuses solely on the ability to cover current liabilities with cash and cash equivalents, has also remained high, ranging between 5.19 to 11.31. This indicates that the company holds a significant amount of cash that could be used to meet immediate obligations without relying on other current assets.

Overall, the liquidity ratios of Inspire Medical Systems Inc reflect a financially sound position, with consistently high levels of current assets and cash reserves relative to short-term liabilities over the past five years. This strong liquidity position indicates the company's ability to meet its short-term financial obligations efficiently and suggests a lower risk of financial distress.

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Additional liquidity measure

The cash conversion cycle of Inspire Medical Systems Inc has shown varying trends over the past five years. In 2023, the company's cash conversion cycle increased to 49.23 days from 40.97 days in 2022. This indicates that the company took slightly longer to convert its investments in inventory into cash receipts from sales in 2023 compared to the previous year.

However, when comparing with earlier years, the company has improved its cash conversion cycle significantly since 2019 when it stood at 95.20 days. The decreasing trend from 2019 to 2022 suggests that the company became more efficient in managing its working capital, indicating better inventory management, quicker receivables collection, or increased payables turnover.

Although there was a slight uptick in 2023, it is important to closely monitor this metric in the coming years to ensure that the company's working capital management remains efficient and effective in generating cash flows. Overall, a lower cash conversion cycle signifies that the company is able to convert its resources into cash more quickly, which is a positive sign for its financial health and liquidity.