Vertex Pharmaceuticals Inc (VRTX)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 2.69 | 2.47 | 2.52 | 3.50 | 3.99 | 4.08 | 4.14 | 4.28 | 4.83 | 4.70 | 4.50 | 4.75 | 4.46 | 4.62 | 4.61 | 4.39 | 4.33 | 3.72 | 3.72 | 3.54 |
| Quick ratio | 2.18 | 2.09 | 2.11 | 3.16 | 3.62 | 3.75 | 3.83 | 4.00 | 4.50 | 4.32 | 4.17 | 4.44 | 4.15 | 4.33 | 4.24 | 4.14 | 4.12 | 3.62 | 3.59 | 3.38 |
| Cash ratio | 1.73 | 1.65 | 1.64 | 2.69 | 3.18 | 3.33 | 3.37 | 3.49 | 3.97 | 3.79 | 3.65 | 3.85 | 3.62 | 3.75 | 3.74 | 3.64 | 3.65 | 3.23 | 3.15 | 2.83 |
Vertex Pharmaceuticals Inc has shown consistent strength in its liquidity position over the years based on the analysis of its liquidity ratios.
1. Current Ratio: The current ratio indicates the company's ability to meet short-term obligations with its current assets. Vertex's current ratio has been consistently high, increasing from 3.54 in March 2020 to 4.83 in December 2022 before experiencing a slight decline to 3.99 in December 2023 and further dropping to 2.69 in March 2024. Despite the recent decline, the company has maintained a current ratio above 2, indicating a strong ability to cover its short-term liabilities.
2. Quick Ratio: The quick ratio provides a more stringent measure of liquidity by excluding inventory from current assets. Vertex's quick ratio has followed a similar trend to the current ratio, with a gradual increase from 3.38 in March 2020 to 4.50 in June 2022. However, there has been a decline to 2.18 in December 2024, suggesting a potential impact on the company's ability to meet its short-term obligations without relying on inventory.
3. Cash Ratio: The cash ratio focuses solely on the most liquid assets, cash and cash equivalents, to cover current liabilities. Vertex's cash ratio has generally remained high, ranging from 2.83 in March 2020 to 3.97 in December 2022. There has been a slight decline to 1.73 in December 2024, which may indicate a potential constraint in meeting short-term obligations solely from cash reserves.
Overall, Vertex Pharmaceuticals Inc appears to have maintained a strong liquidity position, as evidenced by its consistently high current and quick ratios over the years. However, the recent decline in these ratios, especially the quick ratio, and the cash ratio in the most recent period may warrant further monitoring to ensure the company's continued ability to meet its short-term financial obligations.
See also:
Vertex Pharmaceuticals Inc Liquidity Ratios (Quarterly Data)
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 148.44 | 144.29 | 135.44 | 128.98 | 114.07 | 108.97 | 99.73 | 98.21 | 86.94 | 105.61 | 90.92 | 92.15 | 87.46 | 102.13 | 95.69 | 96.51 | 83.02 | 82.84 | 84.63 | 88.64 |
The cash conversion cycle of Vertex Pharmaceuticals Inc has exhibited some fluctuations over the periods analyzed. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
From March 31, 2020, to June 30, 2022, the cash conversion cycle generally ranged between 80 to 100 days, indicating that Vertex Pharmaceuticals was able to efficiently manage its cash conversion process during this period. However, the cycle increased notably in the subsequent quarters, reaching a peak of 148.44 days by December 31, 2024.
The increasing trend in the cash conversion cycle from September 30, 2022, suggests potential issues in managing inventory, collecting receivables, or delaying payables, which may have slowed down the cash conversion process for the company. Therefore, it may be important for Vertex Pharmaceuticals Inc to assess and address the factors contributing to the lengthening of the cash conversion cycle to improve efficiency in cash management and maintain healthy liquidity levels.