Jazz Pharmaceuticals PLC (JAZZ)

Jazz Pharmaceuticals PLC's liquidity ratios have shown some fluctuations over the past few years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has ranged from a high of 5.62 in June 2020 to a low of 2.06 in September 2023. Generally, a current ratio above 1 indicates good liquidity, and Jazz Pharmaceuticals has maintained ratios above 2 throughout the period, which is generally considered healthy.

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' quick ratio ranged from 4.14 in June 2020 to 0.67 in March 2022. While the quick ratio tends to be lower than the current ratio, Jazz Pharmaceuticals' ratios have generally been above 1, indicating the company has a sufficient ability to meet its short-term obligations without relying on selling inventory.

The cash ratio, which is the most conservative liquidity ratio and focuses solely on the ability to cover short-term liabilities with cash and cash equivalents, has shown similar trends to the quick ratio for Jazz Pharmaceuticals. The cash ratio ranged from 4.14 in June 2020 to 0.67 in March 2022. Despite fluctuations, the company has generally maintained ratios above 1, implying a solid position to cover its short-term liabilities with cash on hand.

Overall, Jazz Pharmaceuticals PLC has exhibited relatively strong liquidity positions based on its current, quick, and cash ratios over the analyzed period. However, it is important for the company to closely monitor and manage its liquidity ratios to ensure it can meet its short-term obligations efficiently and effectively.

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Additional liquidity measure

The cash conversion cycle of Jazz Pharmaceuticals PLC has shown fluctuations over the years. In March 2020, the company had a cash conversion cycle of 253.88 days, indicating that it took approximately 254 days to convert its investments in inventory and other resources into cash flows from sales. The cycle continued to increase in the following quarters, reaching a peak of 1,814.97 days in June 2021 and 1,170.68 days in September 2021. This significant increase suggests potential issues in managing inventory, accounts receivable, and accounts payable efficiently.

However, the company made improvements in its cash conversion cycle in the subsequent quarters, with the cycle decreasing to 225.73 days in June 2024. This reduction indicates that Jazz Pharmaceuticals PLC has been more effective in managing its working capital and converting investments into cash quicker. Overall, monitoring the cash conversion cycle is crucial for assessing the company's liquidity, operational efficiency, and overall financial health.