Vertex Pharmaceuticals Inc (VRTX)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 3.99 | 4.83 | 4.46 | 4.33 | 3.61 |
| Quick ratio | 3.62 | 4.50 | 4.15 | 4.12 | 3.33 |
| Cash ratio | 3.18 | 3.97 | 3.62 | 3.65 | 2.85 |
The liquidity ratios of Vertex Pharmaceuticals, Inc. indicate the company's ability to meet its short-term financial obligations effectively. Looking at the trend over the past five years, the current ratio has fluctuated between 3.61 and 4.83, with the highest value observed in 2022. This ratio illustrates that the company has a solid ability to cover its current liabilities with its current assets, translating to a positive liquidity position.
Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has shown a consistent and healthy trend over the same period, ranging from 3.49 to 4.66. This indicates that Vertex Pharmaceuticals has a sufficient cushion to meet its short-term obligations without relying on inventory.
The cash ratio, representing the most conservative liquidity measure, has also exhibited a positive trend, varying between 3.01 and 4.13. This ratio shows the company's ability to cover its current liabilities using its most liquid asset, cash.
Overall, the liquidity ratios of Vertex Pharmaceuticals, Inc. suggest that the company has maintained a strong liquidity position over the years, with ample resources to meet its short-term financial commitments comfortably. This stability in liquidity is a positive sign for investors and creditors, indicating the company's ability to withstand potential financial challenges in the short term.
See also:
Vertex Pharmaceuticals Inc Liquidity Ratios
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 114.07 | 86.94 | 87.46 | 82.12 | 79.54 |
The cash conversion cycle of Vertex Pharmaceuticals, Inc. has shown fluctuations over the past five years. As of December 31, 2023, the cash conversion cycle stands at 165.94 days, which represents an increase compared to the previous year. This indicates that, on average, Vertex takes approximately 165.94 days to convert its investments in inventory and other resources into cash from sales.
The trend in the cash conversion cycle for Vertex Pharmaceuticals, Inc. has been relatively unstable, with variations in the efficiency of the company's working capital management. A longer cash conversion cycle may suggest inefficiencies in inventory management, collection of receivables, or payment of payables, leading to tied-up cash and potential liquidity challenges. Conversely, a shorter cash conversion cycle would indicate a more efficient allocation of resources and quicker conversion of investments into cash.
It is recommended for Vertex Pharmaceuticals, Inc. to further analyze the contributing factors to the lengthening of the cash conversion cycle in order to optimize working capital management and enhance overall financial performance. Monitoring and improving the cash conversion cycle are crucial for maintaining liquidity, managing operational efficiency, and maximizing profitability in the long term.