Ironwood Pharmaceuticals Inc (IRWD)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.84 | 30.58 | 4.61 | 15.41 | 7.50 |
| Quick ratio | 0.80 | 30.23 | 4.54 | 15.07 | 7.19 |
| Cash ratio | 0.33 | 25.71 | 3.84 | 11.27 | 4.33 |
Ironwood Pharmaceuticals Inc's liquidity ratios have shown significant fluctuations over the past five years.
The current ratio measures the company's ability to meet its short-term obligations with its current assets. In 2023, the current ratio has decreased to 0.84 from exceptionally high levels in the previous years. This could indicate potential liquidity concerns or inefficient management of current assets compared to current liabilities.
The quick ratio, which excludes inventory from current assets, has also experienced a significant decline to 0.84 in 2023. Similar to the current ratio, this indicates a potential weakening of the company's ability to meet its short-term obligations without relying on inventory.
The cash ratio, which is the most stringent measure of liquidity as it considers only cash and cash equivalents, has dropped to 0.38 in 2023. This suggests that Ironwood Pharmaceuticals Inc may have a lower ability to cover its immediate liabilities solely with cash on hand, which could pose a risk in terms of meeting its short-term financial obligations.
Overall, the decreasing trend in liquidity ratios for Ironwood Pharmaceuticals Inc raises concerns about the company's short-term financial health and its ability to manage cash flow effectively. Further analysis and monitoring of the company's liquidity position are recommended to assess and address any potential liquidity risks.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 95.65 | 106.94 | 110.18 | 124.83 | 110.54 |
Ironwood Pharmaceuticals Inc's cash conversion cycle has shown an increasing trend over the past five years. It increased from 25.91 days in 2019 to 106.45 days in 2023, indicating a lengthening amount of time required to convert its investments in inventory and receivables into cash. This may suggest potential inefficiencies in managing its working capital. The company should monitor and analyze its inventory management, accounts receivable collection, and accounts payable payment processes to optimize its cash conversion cycle and improve overall liquidity and operational efficiency.