Krystal Biotech Inc (KRYS)

Based on the data provided, let's analyze the liquidity ratios of Krystal Biotech Inc over five years.

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets.
- Krystal Biotech Inc's current ratio has been consistently high over the years, ranging from 13.30 to 17.80, indicating a strong ability to meet its short-term obligations.
- The gradual decrease in the current ratio from 17.80 in 2020 to 7.28 in 2024 may suggest a potential decrease in the company's short-term liquidity position. However, the ratio remains above 1, indicating that the company has more than enough current assets to cover its current liabilities.

2. Quick Ratio:
- The quick ratio is a more stringent measure of liquidity as it excludes inventory from current assets.
- Krystal Biotech Inc's quick ratio follows a similar trend to the current ratio, ranging from 6.88 to 17.56.
- The decreasing trend in the quick ratio over the years may indicate a potential decline in the company's ability to meet its short-term obligations without relying on inventory. However, the ratios are still significantly above 1, indicating strong liquidity.

3. Cash Ratio:
- The cash ratio specifically focuses on the company's ability to cover its short-term liabilities with its cash and cash equivalents.
- Krystal Biotech Inc's cash ratio shows a similar decreasing trend from 17.56 in 2020 to 5.86 in 2024.
- The decreasing cash ratio may suggest a decline in the company's ability to cover its short-term liabilities solely with cash. Nevertheless, the ratios remain at relatively high levels, indicating a strong cash position.

Overall, the liquidity ratios of Krystal Biotech Inc reflect a consistently strong liquidity position over the years, despite a slight decreasing trend. The company appears to have sufficient current assets and cash to cover its short-term obligations, providing a cushion against financial distress. However, monitoring the decreasing trend in these ratios would be crucial to ensure continued liquidity strength.

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Additional liquidity measure

The cash conversion cycle of Krystal Biotech Inc has shown significant fluctuations over the past few years. In December 2020, the company had a negative cash conversion cycle of -51.01 days, indicating efficient management of cash flow. However, by December 2023, the cash conversion cycle had increased substantially to 285.75 days, suggesting a delay in converting inventory and receivables into cash.

In the following year, December 2024, the cash conversion cycle improved to 197.96 days, but it remained significantly higher compared to previous years. This suggests that Krystal Biotech Inc may be facing challenges in managing working capital efficiently and optimizing its cash flow processes.

Overall, the fluctuating cash conversion cycle of Krystal Biotech Inc indicates the need for the company to closely monitor and enhance its cash management practices to ensure sustainable financial health and operational efficiency.