Innoviva Inc (INVA)

Innoviva Inc's liquidity ratios have shown significant fluctuations over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has increased substantially from 2019 to 2023. This suggests that the company has significantly improved its liquidity position and is better equipped to cover its short-term liabilities.

Similarly, the quick ratio, which provides a more stringent assessment of liquidity by excluding inventory from current assets, has also shown an upward trend over the same period. The quick ratio exceeding the current ratio indicates a strong reliance on liquid assets to meet short-term obligations, which can be seen as a cautious approach to managing liquidity risk.

The cash ratio, which is the most conservative measure of liquidity as it focuses solely on cash and cash equivalents to cover short-term liabilities, has followed the same trend as the current and quick ratios. This indicates that Innoviva Inc has maintained a healthy level of cash reserves relative to its short-term obligations, providing a strong cushion against unexpected liquidity challenges.

Overall, the increasing trend in all three liquidity ratios suggests that Innoviva Inc has been successful in managing its liquidity position over the past five years. The company appears to have sufficient liquid assets to meet its short-term obligations and maintain financial stability.

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Additional liquidity measure

The cash conversion cycle of Innoviva Inc has shown a significant improvement from negative figures in 2021 to 308.21 days in 2023. This indicates that the company has been able to decrease the amount of time it takes to convert its investments in inventory and other resources into cash inflows.

In 2022, the company had a notably long cash conversion cycle of 1,411.77 days, indicating potential inefficiencies in managing its working capital. However, the subsequent improvement in 2023 suggests that the company has implemented better inventory management practices or improved its collection processes, leading to a shorter cash conversion cycle.

Overall, a decreasing trend in the cash conversion cycle is positive for Innoviva Inc as it signifies enhanced efficiency in working capital management and potentially improved cash flow generation. Continued focus on optimizing the cash conversion cycle can help the company free up cash resources and enhance its overall financial performance.