Is Exelixis, Inc.’s (NASDAQ:EXEL) Liquidity Good Enough?

Stocks with market capitalization between $2B and $10B, such as Exelixis, Inc. (NASDAQ:EXEL) with a size of US$7.1b, do not attract as much attention from the investing community as do the small-caps and large-caps. However, history shows that overlooked mid-cap companies have performed better on a risk-adjusted manner than the smaller and larger segment of the market. Today we will look at EXEL’s financial liquidity and debt levels, which are strong indicators for whether the company can weather economic downturns or fund strategic acquisitions for future growth. Note that this commentary is very high-level and solely focused on financial health, so I suggest you dig deeper yourself into EXEL here.

View our latest analysis for Exelixis

Does EXEL Produce Much Cash Relative To Its Debt?

EXEL’s debt level has been constant at around US$15m over the previous year – this includes long-term debt. At this stable level of debt, the current cash and short-term investment levels stands at US$693m to keep the business going. On top of this, EXEL has produced cash from operations of US$416m in the last twelve months, resulting in an operating cash to total debt ratio of 2778%, indicating that EXEL’s operating cash is sufficient to cover its debt.

Can EXEL pay its short-term liabilities?

At the current liabilities level of US$105m, it seems that the business has been able to meet these commitments with a current assets level of US$897m, leading to a 8.5x current account ratio. The current ratio is calculated by dividing current assets by current liabilities. Having said that, a ratio above 3x may be considered excessive by some investors, yet this is not usually a major negative for a company.

NasdaqGS:EXEL Historical Debt, March 27th 2019
NasdaqGS:EXEL Historical Debt, March 27th 2019

Does EXEL face the risk of succumbing to its debt-load?

EXEL’s level of debt is low relative to its total equity, at 1.2%. EXEL is not taking on too much debt commitment, which may be constraining for future growth.

Next Steps:

EXEL has demonstrated its ability to generate sufficient levels of cash flow, while its debt hovers at a safe level. In addition to this, the company exhibits proper management of current assets and upcoming liabilities. I admit this is a fairly basic analysis for EXEL’s financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research Exelixis to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for EXEL’s future growth? Take a look at our free research report of analyst consensus for EXEL’s outlook.
  2. Valuation: What is EXEL worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether EXEL is currently mispriced by the market.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.