Innoviva Inc (INVA)

Cash ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash and cash equivalents	US$ in thousands	304,964	193,513	291,049	201,525	246,487
Short-term investments	US$ in thousands	107,532	0	403,013	483,845	438,258
Total current liabilities	US$ in thousands	236,083	38,134	38,775	5,807	6,110
Cash ratio		1.75	5.07	17.90	118.02	112.07

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($304,964K + $107,532K) ÷ $236,083K
= 1.75

The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents.

Looking at Innoviva Inc's cash ratio over the years, we observe a fluctuating trend. As of December 31, 2020, the cash ratio was 112.07, indicating that the company had a significant amount of cash and cash equivalents relative to its current liabilities. By December 31, 2021, the cash ratio increased to 118.02, further strengthening the company's ability to meet its short-term obligations.

However, there is a substantial decline in the cash ratio by December 31, 2022, where it drops to 17.90. This significant decrease may suggest that the company's cash position relative to its short-term liabilities has reduced, which could potentially indicate liquidity challenges or increased short-term obligations during that period.

The trend continues with a notable decrease in the cash ratio to 5.07 by December 31, 2023, and a further decrease to 1.75 by December 31, 2024. These lower ratios indicate a diminishing ability to cover short-term liabilities with available cash and cash equivalents, potentially raising concerns about the company's liquidity position during these years.

In conclusion, while Innoviva Inc initially had a strong cash position compared to its short-term liabilities, there has been a significant decline in its cash ratio over the years, signaling a potential liquidity strain. Further analysis of the company's cash management and liquidity strategies would be crucial to address these declining trends and ensure financial stability.