Ironwood Pharmaceuticals Inc (IRWD)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	92,154	656,203	620,129	362,564	177,023
Short-term investments	US$ in thousands	—	—	—	—	—
Total current liabilities	US$ in thousands	276,101	25,525	161,698	32,173	40,929
Cash ratio		0.33	25.71	3.84	11.27	4.33

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($92,154K + $—K) ÷ $276,101K
= 0.33

The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. A higher cash ratio indicates a stronger ability to meet these obligations. Looking at the trend for Ironwood Pharmaceuticals Inc over the past five years, there is a significant fluctuation in the cash ratio.

In 2023, the cash ratio dropped to 0.38, indicating that the company may have a limited ability to cover its short-term liabilities solely with its cash and cash equivalents. This sharp decline from the previous year's ratio of 26.01 suggests a substantial decrease in the available cash reserves relative to the current liabilities.

In 2022, the company had an exceptionally high cash ratio of 26.01, signaling a very strong ability to meet short-term obligations with its cash and cash equivalents. This could be due to a significant increase in cash reserves relative to the current liabilities, providing a comfortable buffer for the company.

In 2021, the cash ratio was 3.90, which represents a moderate ability to cover short-term liabilities with available cash. While lower than the previous year, this ratio still indicates a reasonable level of liquidity for Ironwood Pharmaceuticals Inc.

In 2020, the cash ratio was 11.55, showing a strong ability to meet short-term obligations with cash on hand. This suggests that the company had a healthy liquidity position at the end of this year.

In 2019, the cash ratio stood at 4.59, reflecting a moderate level of liquidity to cover short-term liabilities. This ratio indicates that Ironwood Pharmaceuticals Inc had adequate cash reserves to meet its immediate financial obligations.

Overall, the fluctuation in Ironwood Pharmaceuticals Inc's cash ratio over the past five years suggests varying levels of liquidity and ability to cover short-term liabilities with cash and cash equivalents. It is important for the company to maintain an appropriate level of liquidity to withstand any unforeseen financial challenges.