Arcus Biosciences Inc (RCUS)

Arcus Biosciences Inc's liquidity ratios demonstrate a strong ability to meet its short-term obligations. The current ratio has shown a positive trend over the years, improving from 6.05 in 2020 to 7.60 in 2021 before decreasing to 4.50 in 2024. This indicates that the company had more than enough current assets to cover its current liabilities in the earlier years, although a slight decline is seen in recent years.

Similarly, the quick ratio, which excludes inventory from current assets, also reflects a favorable liquidity position for Arcus Biosciences Inc. The quick ratio has followed a similar trend to the current ratio, starting at 6.00 in 2020, peaking at 7.51 in 2021, and then decreasing slightly to 4.35 in 2024. This ratio suggests that the company can meet its short-term obligations without relying on selling inventory.

Moreover, the cash ratio, which is the most conservative liquidity measure, demonstrates the company's ability to cover its current liabilities with its cash and cash equivalents. Although there was a significant decline in the cash ratio from 5.99 in 2020 to 3.01 in 2021, the ratio improved to 4.33 in 2024, indicating that the company has a higher level of cash to meet its short-term obligations in recent years.

Overall, Arcus Biosciences Inc seems to have a healthy liquidity position based on its current, quick, and cash ratios, which suggests the company's ability to efficiently manage its short-term financial obligations.

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Additional liquidity measure

The cash conversion cycle of Arcus Biosciences Inc has shown significant fluctuations over the years.

- As of December 31, 2020, the company had a negative cash conversion cycle of -118.16 days, indicating that it was able to generate cash before paying its suppliers and expenses.
- By December 31, 2021, the cash conversion cycle increased sharply to 663.94 days, suggesting a lag in cash generation compared to its payables and inventory turnover.
- However, there was a notable improvement by December 31, 2022, with the cash conversion cycle dropping to 73.77 days, showing better efficiency in managing its working capital.
- The trend reversed again by December 31, 2023, as the cash conversion cycle turned negative at -37.16 days, implying that the company was more efficient in collecting cash from customers than paying its obligations.
- This trend continued into December 31, 2024, with a slightly improved negative cash conversion cycle of -36.73 days, indicating continued effectiveness in managing its cash flow.

Overall, the fluctuation in Arcus Biosciences Inc's cash conversion cycle suggests varying efficiencies in managing its working capital and cash flow over the years. It's essential for the company to monitor and address these fluctuations to ensure consistent and optimal working capital management.