Vertex Pharmaceuticals Inc (VRTX)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 2.69 | 3.99 | 4.83 | 4.46 | 4.33 |
| Quick ratio | 2.18 | 3.62 | 4.50 | 4.15 | 4.12 |
| Cash ratio | 1.73 | 3.18 | 3.97 | 3.62 | 3.65 |
Vertex Pharmaceuticals Inc has shown consistently strong liquidity positions over the past five years based on its liquidity ratios.
The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, has been steadily increasing from 4.33 in December 2020 to 4.83 in December 2022. However, there was a slight decrease to 3.99 in December 2023 and a further drop to 2.69 in December 2024. While the current ratio remains above 1 (indicating the company has more than enough current assets to cover its current liabilities), the decreasing trend in recent years may warrant monitoring to ensure the company's liquidity remains adequate.
The quick ratio, a more stringent measure of liquidity that excludes inventories from current assets, has also shown a similar trend of improvement over the years, from 4.12 in December 2020 to 4.50 in December 2022. However, like the current ratio, it decreased to 3.62 in December 2023 and 2.18 in December 2024. This indicates that while Vertex Pharmaceuticals Inc has a strong ability to cover its short-term obligations, the decreasing trend in recent years should be noted for potential liquidity concerns.
The cash ratio, which specifically measures the company's ability to cover current liabilities with its cash and cash equivalents, has also been relatively stable, ranging from 1.73 to 3.97 over the five-year period. However, the ratio decreased to 1.73 in December 2024, suggesting a potential decrease in the company's ability to meet short-term obligations using only cash resources.
Overall, Vertex Pharmaceuticals Inc has maintained a strong liquidity position as indicated by its current, quick, and cash ratios. However, the recent downward trend in these ratios, particularly in 2024, may signal a need for closer monitoring to ensure the company's ability to meet its short-term obligations remains robust.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 148.39 | 114.07 | 86.94 | 87.46 | 82.12 |
The cash conversion cycle of Vertex Pharmaceuticals Inc has exhibited fluctuations over the years based on the provided data.
As of December 31, 2020, the cash conversion cycle stood at 82.12 days, indicating that on average, it took the company approximately 82.12 days to convert its investments in inventory and other resources back into cash.
By the end of December 31, 2021, the cash conversion cycle extended to 87.46 days, suggesting a slightly longer period required to complete the cash conversion process compared to the previous year.
In the following year, by December 31, 2022, the cash conversion cycle decreased marginally to 86.94 days, indicating a slight improvement in the efficiency of Vertex Pharmaceuticals Inc in managing its working capital.
However, there was a notable increase in the cash conversion cycle by December 31, 2023, where it reached 114.07 days, signifying a considerable delay in the company's ability to convert invested resources into cash.
By the most recent year end of December 31, 2024, the cash conversion cycle further extended to 148.39 days, implying a significant challenge in efficiently managing working capital and converting investments into cash within a reasonable timeframe.
Overall, the trend in Vertex Pharmaceuticals Inc's cash conversion cycle suggests fluctuations in the efficiency of its working capital management over the years, indicating the need for a closer examination of the company's operational processes and liquidity management strategies to improve cash conversion efficiency.