Pacira BioSciences, Inc. (PCRX)

The liquidity ratios of Pacira BioSciences, Inc. provide insight into the company's ability to meet its short-term financial obligations.

1. Current Ratio:
- The current ratio indicates the company's ability to pay its short-term liabilities with its short-term assets. A current ratio above 1.0 is generally considered healthy.
- Pacira BioSciences' current ratio has fluctuated over the years, ranging from a high of 5.24 in December 31, 2023, to a low of 1.66 in December 31, 2021.
- While the company's current ratio has been above 1.0 in all years, the varying levels suggest fluctuations in the proportion of current assets to current liabilities.

2. Quick Ratio:
- The quick ratio measures the company's ability to cover its short-term liabilities with its most liquid assets excluding inventory. Generally, a quick ratio above 1.0 is preferable.
- Pacira BioSciences' quick ratio has also varied year over year, with the highest value of 2.86 in December 31, 2023, and the lowest of 1.26 in December 31, 2021.
- The company's quick ratio indicates its ability to meet short-term obligations without relying on selling inventory, aligning with the trends seen in the current ratio.

3. Cash Ratio:
- The cash ratio focuses only on the most liquid assets, specifically cash and cash equivalents, to cover short-term liabilities. A higher cash ratio signifies a stronger ability to cover current debts.
- Pacira BioSciences' cash ratio has fluctuated similarly to the quick ratio, with the highest value of 2.86 in December 31, 2023, and the lowest of 1.26 in December 31, 2021.
- The cash ratio reflects the company's ability to rely on cash reserves to meet immediate financial obligations, indicating a strong position in maintaining short-term liquidity.

In summary, the liquidity ratios of Pacira BioSciences, Inc. indicate varying levels of short-term liquidity over the years, with fluctuations in the current, quick, and cash ratios. While the company has generally maintained ratios above 1.0, suggesting a capacity to meet short-term obligations, the fluctuations highlight the importance of monitoring the firm's liquidity position for continued financial stability.

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Additional liquidity measure

The cash conversion cycle of Pacira BioSciences, Inc. has exhibited some fluctuations over the past five years. In December 2020, the company's cash conversion cycle was 201.12 days, indicating that it took around 201 days for the company to convert its investments in inventory and other resources into cash from sales.

By December 2021, the cash conversion cycle had increased to 256.47 days, suggesting a longer time taken to convert resources into cash, which may signal potential inefficiencies in the company's operations or challenges in managing working capital effectively.

However, in December 2022, there was a significant improvement as the cash conversion cycle decreased to 175.94 days, indicating a more efficient cash conversion process. This improvement may have been a result of better inventory management or enhanced collection practices.

The trend reversed in December 2023, with the cash conversion cycle increasing to 206.25 days, suggesting a slowdown in the company's ability to convert investments into cash. This increase could be attributed to various factors such as extended payment terms with suppliers or delays in receiving payments from customers.

In the most recent period, December 2024, the cash conversion cycle further increased to 268.31 days, indicating a significant challenge in efficiently managing working capital and converting investments into cash. This elongated cycle may raise concerns about liquidity and operational efficiency.

Overall, Pacira BioSciences, Inc. should continue monitoring and improving its cash conversion cycle to ensure optimal working capital management and operational effectiveness.