Align Technology Inc (ALGN)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.22 | 1.18 | 1.26 | 1.30 | 1.40 |
| Quick ratio | 0.51 | 0.47 | 0.52 | 0.61 | 0.72 |
| Cash ratio | 0.51 | 0.47 | 0.52 | 0.61 | 0.72 |
Align Technology Inc's liquidity ratios have shown a slight decline over the years based on the provided data. The current ratio, which indicates the company's ability to pay its short-term obligations with its current assets, decreased from 1.40 in December 31, 2020, to 1.22 in December 31, 2024. This suggests a reduction in the company's short-term liquidity position.
Similarly, the quick ratio, which measures the company's ability to cover immediate liabilities with its most liquid assets, also decreased from 0.72 in December 31, 2020, to 0.51 in December 31, 2024. This decline indicates that Align Technology Inc may have become less capable of meeting its short-term obligations without relying on inventory.
Lastly, the cash ratio, which focuses solely on the company's ability to cover its current liabilities with cash and cash equivalents, followed a similar downward trend from 0.72 in December 31, 2020, to 0.51 in December 31, 2024. This suggests a decrease in the company's ability to fulfill its short-term obligations using its cash resources only.
Overall, the declining trend in these liquidity ratios indicates potential challenges for Align Technology Inc in meeting its short-term financial obligations without potentially having to rely on inventory or other less liquid assets in the future.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 77.36 | 93.79 | 112.32 | 82.61 | 71.71 |
Align Technology Inc's cash conversion cycle has shown some fluctuations over the past five years. In 2020, the company had a cash conversion cycle of 71.71 days, which increased to 82.61 days in 2021. In 2022, there was a significant jump to 112.32 days, indicating a longer time period for Align Technology to convert its investments in inventory and accounts receivable into cash.
However, the cash conversion cycle improved in 2023, decreasing to 93.79 days, and further decreased to 77.36 days in 2024. This suggests that the company managed its inventory, accounts receivable, and accounts payable more efficiently, resulting in a shorter time to convert its resources into cash.
Overall, fluctuations in the cash conversion cycle can indicate changes in working capital management efficiency and operational performance. The company may need to focus on optimizing its inventory management and collection processes to continue improving its cash conversion cycle in the future.