Jazz Pharmaceuticals PLC (JAZZ)

Jazz Pharmaceuticals PLC's liquidity ratios have shown fluctuations over the years.

1. Current Ratio: The current ratio measures the company's ability to cover its short-term obligations with its current assets. Jazz Pharmaceuticals PLC's current ratio has decreased from 4.34 in 2020 to 2.24 in 2023 before slightly increasing to 4.46 in 2024. This trend indicates that the company may have had a more robust short-term liquidity position in the past, but it has improved in the most recent year.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Jazz Pharmaceuticals PLC's quick ratio has fluctuated significantly over the years, dropping from 3.26 in 2020 to 0.73 in 2021, before gradually improving to 2.88 in 2024. The sharp decrease in 2021 suggests potential difficulties in meeting immediate obligations, but the subsequent recovery indicates better liquidity management.

3. Cash Ratio: The cash ratio is the most conservative liquidity measure, considering only cash and cash equivalents to cover short-term liabilities. Jazz Pharmaceuticals PLC's cash ratio has followed a similar pattern to the quick ratio, indicating fluctuations in the company's ability to cover its short-term obligations with cash on hand.

Overall, while Jazz Pharmaceuticals PLC has experienced fluctuations in its liquidity ratios, the recent increase in current and quick ratios, as well as the strong cash ratio in 2024, suggest an improved liquidity position for the company at the end of the period analyzed.

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Additional liquidity measure

The cash conversion cycle for Jazz Pharmaceuticals PLC has shown fluctuations over the years based on the provided data.

As of December 31, 2020, the cash conversion cycle stood at 233.82 days, indicating that the company took approximately 234 days to convert its investments in inventory and other resources into cash.

By December 31, 2021, the cash conversion cycle significantly increased to 888.34 days, suggesting a considerable delay in the company's ability to convert investments into cash. This could be a concern as it indicates a prolonged period for Jazz Pharmaceuticals to recover its cash invested in the business cycle.

In the following years, there were some improvements in the cash conversion cycle. By December 31, 2022, the cycle decreased to 482.19 days, indicating enhanced efficiency in managing working capital. However, it increased slightly to 500.30 days by December 31, 2023.

As of the most recent data on December 31, 2024, the cash conversion cycle for Jazz Pharmaceuticals PLC decreased to 393.44 days. This denotes a more efficient conversion of inventory and resources into cash compared to previous years.

Overall, fluctuations in the cash conversion cycle can be influenced by various factors such as inventory management, accounts receivable collection, and accounts payable practices. Monitoring and managing the cash conversion cycle is crucial for ensuring efficient working capital management and optimizing cash flow for Jazz Pharmaceuticals PLC.