Roivant Sciences Ltd (ROIV)

Roivant Sciences Ltd's liquidity ratios show a consistent trend of improvement over the years.

1. Current Ratio:
- The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has increased significantly from 9.99 in 2021 to 25.24 in 2024, indicating a strong ability to meet its short-term obligations.
- The significant increase in the current ratio suggests that Roivant Sciences has a substantial amount of current assets relative to its current liabilities, providing a comfortable cushion in case of unexpected liquidity needs.

2. Quick Ratio:
- The quick ratio, a more stringent measure of liquidity excluding inventory from current assets, also displays a positive trend, rising from 9.80 in 2021 to 24.83 in 2024.
- This increase indicates that the company has a higher proportion of highly liquid assets that can be quickly converted to cash to meet short-term obligations without relying on selling inventory.

3. Cash Ratio:
- The cash ratio, which focuses solely on the ability to cover current liabilities with cash and cash equivalents, follows a similar pattern of improvement, climbing from 9.74 in 2021 to 24.52 in 2024.
- The increasing cash ratio suggests that Roivant Sciences has a strong cash position relative to its current liabilities, providing a solid foundation for financial stability and operational flexibility.

Overall, the liquidity ratios of Roivant Sciences Ltd reflect a robust financial position with a strengthening ability to meet short-term financial commitments and unexpected cash needs over the years.

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Additional liquidity measure

The cash conversion cycle of Roivant Sciences Ltd has shown significant fluctuations over the past five years. As of March 31, 2021, the company had a lengthy cash conversion cycle of 7,898.82 days, indicating that it took a considerable amount of time to convert its investments in inventory and receivables into cash.

However, there was a drastic improvement in the following year, with the cash conversion cycle plunging to -1,363.41 days as of March 31, 2022. This negative figure suggests that Roivant Sciences was able to convert its investments into cash much faster than before, potentially indicating more efficient operations or improved working capital management.

The trend continued into the subsequent years, with the cash conversion cycle staying negative at -750.81 days as of March 31, 2023, and further decreasing to 7.61 days by March 31, 2024. This progression indicates a sustained improvement in the company's cash conversion efficiency.

By March 31, 2025, Roivant Sciences Ltd achieved a cash conversion cycle of 0.00 days, implying that the company was able to efficiently manage its cash flow and convert investments into cash almost immediately.

Overall, the fluctuating but ultimately improving trend in Roivant Sciences' cash conversion cycle suggests enhancements in working capital management, inventory control, and accounts receivable collection efficiency over the five-year period.