Viatris Inc (VTRS)

The liquidity ratios of Viatris Inc, namely the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations with its current assets.

1. Current ratio: Viatris Inc's current ratio has shown improvement over the years, increasing from 1.21 in 2019 to 1.67 in 2023. This indicates the company's strengthening ability to cover its short-term liabilities with its current assets. A current ratio above 1 signifies that the company has more current assets than current liabilities.

2. Quick ratio: The quick ratio measures Viatris Inc's ability to meet its short-term obligations without relying on inventory. The trend in Viatris Inc's quick ratio has been somewhat stable, with a slight fluctuation over the years. However, the quick ratio remains below 1, indicating a potential liquidity challenge in meeting immediate obligations without relying on inventory.

3. Cash ratio: Viatris Inc's cash ratio shows the firm's ability to cover current liabilities with cash and cash equivalents. The cash ratio has improved steadily from 0.18 in 2019 to 0.39 in 2023, suggesting an enhancement in the company's capacity to repay immediate obligations with liquid assets.

Overall, the current ratio reflects a positive trend in Viatris Inc's liquidity position, indicating an improvement in the company's ability to meet short-term obligations. However, the quick ratio suggests a potential reliance on inventory to meet short-term obligations, while the cash ratio shows a favorable increase in the cash position, enhancing the company's ability to pay off current liabilities with liquid assets.

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Additional liquidity measure

The cash conversion cycle for Viatris Inc has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle decreased slightly to 149.74 days from 151.13 days in 2022. This indicates that the company was able to convert its investments in inventory back to cash slightly quicker in 2023 compared to the previous year.

Comparing to 2021, there was a further improvement in the cash conversion cycle from 155.86 days to 149.74 days in 2023, suggesting that the company managed its working capital more efficiently, possibly by reducing the time it takes to sell its inventory and collect receivables.

However, in 2020, Viatris Inc experienced a significantly longer cash conversion cycle of 307.79 days, which could indicate inefficiencies in managing its working capital during that period. The company was able to improve its cash conversion cycle significantly in 2021 and has maintained better performance in subsequent years.

Overall, Viatris Inc has made progress in managing its cash conversion cycle in recent years, reflecting possible improvements in inventory turnover, accounts receivable collection, and accounts payable management.