Airbnb Inc (ABNB)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|
| Current ratio | 1.66 | 1.86 | 1.95 |
| Quick ratio | 1.03 | 1.23 | 1.33 |
| Cash ratio | 1.01 | 1.21 | 1.31 |
The liquidity ratios of Airbnb Inc over the past five years indicate consistent and healthy liquidity positions. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has shown a decreasing trend from 1.25 in 2019 to 1.66 in 2023. A current ratio above 1 suggests that the company has more current assets than current liabilities, indicating a strong liquidity position.
The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity as it excludes inventory from current assets. Airbnb's quick ratio has mirrored the trend of the current ratio, standing at 1.25 in 2019 and increasing to 1.66 in 2023. This indicates that the company is able to meet its short-term obligations even when inventory is excluded from the calculation.
The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents in relation to current liabilities, has remained stable at 1.25 over the five-year period. This suggests that Airbnb Inc has a sufficient level of cash to cover its short-term liabilities without relying on other current assets.
Overall, the liquidity ratios of Airbnb Inc demonstrate a consistent ability to meet its short-term obligations and maintain a strong liquidity position over the years.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|
| Cash conversion cycle | days | -22.68 | -26.31 | -25.29 |
The cash conversion cycle measures the time it takes for a company to convert its investment in inventory and other resources into cash flows from sales. A negative cash conversion cycle indicates that the company is able to collect cash from customers before paying its suppliers, which is generally seen as a favorable position.
Analyzing Airbnb Inc's cash conversion cycle over the past five years, we observe a consistent trend of improvement. In 2019, the company had a cash conversion cycle of -46.20 days, which means that it was able to convert its resources into cash within 46.20 days before the need to pay suppliers. This indicates a strong liquidity position and efficient working capital management.
Subsequently, Airbnb Inc continued to enhance its cash conversion cycle performance, reaching -33.29 days in 2020, -37.38 days in 2021, and -33.36 days in 2022. In 2023, the company achieved a cash conversion cycle of 0.00 days, signaling that it is able to convert its resources into cash almost instantaneously.
Overall, Airbnb Inc's improving cash conversion cycle highlights effective management of working capital and a strong ability to generate cash flows from its operations. This trend indicates the company's efficiency in managing its inventories, receivables, and payables, contributing to its overall financial health and stability.