Innoviva Inc (INVA)

Quick ratio

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash 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
Receivables US$ in thousands — — — — —
Total current liabilities US$ in thousands 236,083 38,134 38,775 5,807 6,110
Quick ratio 1.75 5.07 17.90 118.02 112.07

December 31, 2024 calculation

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

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations using its most liquid assets. A higher quick ratio generally indicates a stronger liquidity position.

The quick ratio of Innoviva Inc has shown a fluctuating trend over the years. As of December 31, 2020, the quick ratio was exceptionally high at 112.07, indicating strong short-term liquidity. This ratio further improved to 118.02 by December 31, 2021, suggesting an even better ability to cover immediate liabilities.

However, there was a significant decline in the quick ratio by December 31, 2022, dropping to 17.90. This decline may raise concerns about the company's ability to meet short-term obligations using its quick assets alone. The ratio further decreased to 5.07 by December 31, 2023, indicating a continued strain on short-term liquidity.

By December 31, 2024, the quick ratio reduced even further to 1.75. Such a low quick ratio may suggest potential difficulties in meeting immediate payment obligations without relying on the sale of inventory or obtaining additional financing.

Overall, while Innoviva Inc demonstrated very strong liquidity in the past, the recent downward trend in the quick ratio raises questions about the company's ability to cover short-term liabilities solely with its most liquid assets. It would be advisable for the company to closely monitor its liquidity position and take appropriate measures to enhance its ability to meet short-term obligations going forward.