Align Technology Inc (ALGN)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.22 | 1.26 | 1.18 | 1.23 | 1.18 | 1.27 | 1.17 | 1.16 | 1.26 | 1.38 | 1.32 | 1.33 | 1.30 | 1.37 | 1.32 | 1.52 | 1.40 | 1.31 | 1.22 | 1.73 |
| Quick ratio | 0.51 | 0.50 | 0.38 | 0.44 | 0.47 | 0.60 | 0.48 | 0.44 | 0.52 | 0.60 | 0.50 | 0.54 | 0.61 | 0.69 | 0.64 | 0.81 | 0.72 | 0.55 | 0.43 | 0.87 |
| Cash ratio | 0.51 | 0.50 | 0.38 | 0.44 | 0.47 | 0.60 | 0.48 | 0.44 | 0.52 | 0.60 | 0.50 | 0.54 | 0.61 | 0.69 | 0.64 | 0.81 | 0.72 | 0.55 | 0.43 | 0.87 |
Based on the provided data, let's analyze the liquidity ratios of Align Technology Inc:
1. Current Ratio:
- The current ratio measures the company's ability to meet its short-term obligations with its short-term assets.
- Align Technology Inc's current ratio has fluctuated over the years, ranging between 1.16 to 1.73.
- The current ratio generally indicates that the company has more than enough current assets to cover its current liabilities.
- A current ratio above 1 suggests that the company is in a good position to meet its short-term obligations.
2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets.
- Align Technology Inc's quick ratio has varied between 0.38 to 0.81.
- The quick ratio indicates the company's ability to meet its immediate short-term liabilities without relying on the sale of inventory.
- A quick ratio above 1 is typically considered healthy; however, the company's quick ratio has been below this threshold for most periods.
3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, focusing solely on the company's ability to cover its current liabilities with cash and cash equivalents.
- Align Technology Inc's cash ratio has ranged from 0.38 to 0.87.
- The cash ratio provides insight into the company's ability to meet its obligations without needing to rely on other current assets.
- A higher cash ratio indicates a stronger ability to cover short-term debts.
Overall, while the current ratio suggests that Align Technology Inc generally has more current assets than current liabilities, the quick ratio and cash ratio indicate a lower level of liquidity when considering assets that can be quickly converted into cash. The company may need to monitor its liquidity position to ensure it can meet its short-term obligations efficiently.
See also:
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 78.07 | 78.98 | 80.58 | 87.85 | 94.07 | 93.84 | 101.37 | 101.69 | 112.32 | 106.14 | 103.52 | 94.62 | 82.61 | 79.18 | 72.98 | 71.43 | 71.71 | 67.82 | 75.79 | 65.65 |
Align Technology Inc's cash conversion cycle has fluctuated over the periods provided. Starting from around 65.65 days in March 2020, the cycle increased gradually reaching its peak at 112.32 days in December 2022. This indicates that the company's cash is tied up in its operating cycle longer before being converted back into cash.
From December 2022 onwards, the cash conversion cycle decreased steadily, showing improvements in managing its working capital and converting inventory and receivables into cash more efficiently. By December 2024, the cycle reduced to 78.07 days, implying the company was able to streamline its operations to generate cash more quickly.
Overall, monitoring and managing the cash conversion cycle are crucial for Align Technology Inc to optimize its working capital and liquidity position effectively. It shows how efficiently the company manages its cash flow, inventory, and receivables, providing insights into its operational effectiveness and financial health.