Vericel Corp Ord (VCEL)

Vericel Corp has shown consistent strength in its liquidity position over the past five years based on the liquidity ratios analyzed.

The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, has remained consistently high, ranging from 4.49 in 2023 to 6.08 in 2021. This indicates that Vericel Corp has had more than enough current assets to cover its current liabilities in each of the past five years, providing a strong buffer against potential financial difficulties.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Vericel Corp has maintained a strong quick ratio over the years, with values ranging from 3.82 in 2023 to 5.57 in 2021. This indicates that the company has a solid ability to meet its short-term obligations without relying on selling inventory, which is positive for its financial stability.

The cash ratio, which is the most conservative liquidity ratio, measures a company's ability to cover its current liabilities with its cash and cash equivalents alone. Vericel Corp has shown a decreasing trend in its cash ratio over the years, ranging from 2.54 in 2023 to 4.13 in 2021. While the cash ratio has decreased, the values are still relatively high, indicating that the company holds a significant amount of cash compared to its current liabilities.

Overall, Vericel Corp's liquidity ratios demonstrate a strong and stable liquidity position, with ample current assets to cover short-term obligations. This indicates the company's ability to weather potential financial downturns and its capacity to meet its financial obligations efficiently.

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Additional liquidity measure

Vericel Corp's cash conversion cycle has demonstrated a fluctuating trend over the past five years. As of December 31, 2023, the company's cash conversion cycle stands at 53.27 days, showing a significant improvement compared to the previous year. This reduction in the cash conversion cycle indicates that Vericel Corp has been managing its working capital more efficiently, converting its resources into cash faster.

In contrast, looking back at December 31, 2022, the company had a notably longer cash conversion cycle of 97.03 days. This suggests that Vericel Corp took longer to convert its investments in raw materials and production processes into cash receipts during that period, potentially impacting its liquidity and operational efficiency.

Further historical analysis reveals that the cash conversion cycle reached its peak at 125.18 days on December 31, 2020, indicating a potential challenge in managing working capital effectively at that time. However, the company showed improvement in the subsequent years, with a decrease in the cash conversion cycle by December 31, 2021 and a more significant decrease by December 31, 2023.

Overall, Vericel Corp's decreasing trend in the cash conversion cycle over the years suggests an enhancement in the company's cash management capabilities and operational efficiency. This improvement may indicate better control over inventory levels, accounts receivable, and accounts payable, leading to a more streamlined cash flow cycle for the organization.