Airbnb Inc (ABNB)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|
| Current ratio | 1.69 | 1.66 | 1.86 | 1.95 |
| Quick ratio | 1.06 | 1.03 | 1.23 | 1.33 |
| Cash ratio | 1.04 | 1.01 | 1.21 | 1.31 |
Based on the provided data, let's analyze the liquidity ratios of Airbnb Inc:
1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets. A higher current ratio indicates a better ability to meet short-term obligations.
- Airbnb Inc's current ratio has shown a slight decline over the years, from 1.95 in 2021 to 1.69 in 2024. While the current ratio remains above 1, indicating that Airbnb has more than enough current assets to cover its current liabilities, the decreasing trend suggests a potential decrease in short-term liquidity as compared to previous years.
2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, is a more stringent measure of short-term liquidity as it excludes inventory from current assets.
- Airbnb Inc's quick ratio has also shown a downward trend, from 1.33 in 2021 to 1.06 in 2024. Similar to the current ratio, the quick ratio above 1 indicates that the company can cover its short-term liabilities with more liquid assets. However, the decreasing trend suggests a potential reduction in immediate liquidity.
3. Cash Ratio:
- The cash ratio is the most stringent liquidity ratio as it only considers cash and cash equivalents to cover current liabilities.
- Airbnb Inc's cash ratio has followed a similar pattern to the quick and current ratio, declining from 1.31 in 2021 to 1.04 in 2024. The decreasing cash ratio implies a reduction in the company's ability to cover its short-term obligations solely with cash and cash equivalents.
In summary, while Airbnb Inc maintains liquidity ratios above 1 throughout the years, indicating a healthy level of liquidity to cover short-term liabilities, the declining trend in the current, quick, and cash ratios suggests a potential decrease in the company's short-term liquidity position over the years, highlighting the importance of monitoring and managing liquidity effectively.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|
| Cash conversion cycle | days | -22.77 | 1,124.19 | -26.31 | -25.29 |
The cash conversion cycle of Airbnb Inc has shown fluctuating trends over the years as per the provided data:
1. December 31, 2021: The cash conversion cycle was -25.29 days, indicating that Airbnb Inc was able to convert its invested resources into cash relatively quickly during this period.
2. December 31, 2022: The cash conversion cycle decreased further to -26.31 days, suggesting continued efficiency in managing cash flows and converting investments into cash.
3. December 31, 2023: A significant spike was observed in the cash conversion cycle, reaching 1,124.19 days. This sharp increase may indicate challenges in converting resources into cash efficiently, potentially due to changes in the operating environment or business practices.
4. December 31, 2024: The cash conversion cycle improved to -22.77 days, moving back into negative territory. This suggests that Airbnb Inc managed to streamline its cash conversion process and convert investments into cash at a faster rate compared to the previous year.
Overall, the cash conversion cycle analysis shows that Airbnb Inc experienced fluctuations in its ability to convert invested resources into cash efficiently. The company demonstrated periods of strong cash conversion performance, as well as challenges that led to longer cash conversion cycles. Monitoring and managing this cycle effectively will be crucial for optimizing cash flow management and operational efficiency in the future.