Align Technology Inc (ALGN)
Liquidity ratios
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 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 | 1.68 | 1.73 | 1.85 | 1.79 |
| Quick ratio | 0.98 | 1.03 | 0.91 | 0.88 | 1.04 | 1.08 | 1.02 | 1.05 | 1.08 | 1.17 | 1.12 | 1.33 | 1.23 | 1.12 | 0.95 | 1.49 | 1.84 | 1.55 | 1.64 | 1.51 |
| Cash ratio | 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 | 1.22 | 0.91 | 0.92 | 0.91 |
The liquidity ratios of Align Technology, Inc. indicate the company's ability to meet its short-term obligations and cover immediate expenses.
The current ratio, which measures the company's ability to pay off its short-term liabilities with its current assets, has shown some fluctuation over the past eight quarters, ranging from 1.16 to 1.38. A current ratio above 1 indicates that the company has more current assets than liabilities, with Q3 2022 having the highest ratio of 1.38, suggesting a stronger liquidity position during that quarter.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. This ratio has ranged from 1.01 to 1.20 over the same period. A quick ratio above 1 implies that the company can cover its short-term obligations without relying on selling inventory. Q3 2022 had the highest quick ratio of 1.20, indicating a stronger ability to meet short-term obligations without needing to sell inventory quickly.
The cash ratio reflects the company's ability to pay off its current liabilities only with its cash and cash equivalents. It has fluctuated between 0.49 and 0.66, suggesting variations in the company's immediate cash availability over the quarters. A cash ratio above 1 indicates that the company can repay its current liabilities solely with its cash on hand. While the cash ratio for Align Technology, Inc. fluctuated, it has generally been below 1, implying that the company may need to tap into other current assets to meet its short-term obligations.
Overall, the liquidity ratios for Align Technology, Inc. have shown some variability over the past eight quarters, with the company generally maintaining a position where it can cover its short-term obligations, although the cash ratio indicates a reliance on assets other than cash to meet immediate liabilities. Further analysis and monitoring may be necessary to assess the company's liquidity position accurately.
See also:
Additional liquidity measure
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 157.02 | 148.95 | 154.39 | 146.26 | 167.67 | 141.39 | 140.16 | 116.70 | 106.66 | 95.40 | 65.98 | 105.69 | 96.42 | 104.38 | 104.52 | 111.84 | 104.64 | 107.48 | 105.98 | 88.09 |
Align Technology, Inc.'s cash conversion cycle has fluctuated over the past 8 quarters, ranging from a low of 128.92 days in Q1 2022 to a high of 167.79 days in Q2 2023. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
A shorter cash conversion cycle indicates that the company is able to more efficiently manage its working capital and convert inventory into cash, which is generally favorable. Conversely, a longer cash conversion cycle may suggest inefficiencies in inventory management or delays in collecting receivables.
Analyzing the trend, we see that Align Technology's cash conversion cycle peaked in Q2 2023 at 167.79 days, possibly indicating challenges in managing inventory or delays in receiving payments from customers. However, in Q4 2023, the cash conversion cycle decreased to 143.43 days, showing an improvement in the company's working capital management.
Overall, Align Technology, Inc. should continue to monitor and actively manage its cash conversion cycle to optimize its working capital efficiency and enhance liquidity position.