Axon Enterprise Inc. (AXON)
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 | 2.30 | 2.96 | 2.88 | 2.91 | 3.00 | 3.15 | 3.38 | 3.33 | 3.00 | 2.79 | 2.70 | 2.44 | 2.65 | 2.96 | 3.96 | 4.11 | 3.83 | 3.39 | 3.65 | 3.17 |
| Quick ratio | 0.65 | 1.03 | 1.41 | 1.40 | 1.65 | 1.66 | 1.81 | 1.77 | 1.62 | 0.88 | 0.87 | 0.99 | 1.06 | 1.53 | 2.40 | 2.48 | 2.19 | 1.96 | 2.29 | 1.77 |
| Cash ratio | 0.65 | 1.03 | 1.41 | 1.40 | 1.65 | 1.66 | 1.81 | 1.77 | 1.62 | 0.88 | 0.87 | 0.99 | 1.06 | 1.53 | 2.40 | 2.48 | 2.19 | 1.96 | 2.29 | 1.77 |
Axon Enterprise Inc.'s liquidity ratios provide insights into its ability to meet short-term obligations. The current ratio, which measures the firm's ability to pay its current liabilities with its current assets, showed a generally strong trend from March 31, 2020, to December 31, 2021, with values above 3.0. However, the ratio started to decline from March 31, 2022, reaching a low of 2.30 at December 31, 2024, indicating a potential weakening in the company's short-term liquidity position.
The quick ratio, a more stringent measure of liquidity as it excludes inventory from current assets, followed a similar trend to the current ratio. The quick ratio also showed a decline over the same period, with values decreasing from 2.48 at March 31, 2021, to 0.65 at December 31, 2024. This indicates a substantial decrease in the ability of Axon Enterprise Inc. to meet its immediate liabilities with its most liquid assets.
Lastly, the cash ratio, which is the most conservative measure of liquidity as it only considers cash and cash equivalents, mirrored the trends seen in the current and quick ratios. Despite variations in the absolute values, the cash ratio showed a decreasing trend from March 31, 2021, to December 31, 2024, suggesting a diminishing ability of the company to cover its short-term liabilities solely with its cash reserves.
Overall, the declining trend in Axon Enterprise Inc.'s liquidity ratios from 2022 to 2024 indicates a potential liquidity challenge, highlighting the importance of monitoring the company's short-term financial health and working capital management to ensure its ability to meet obligations as they come due.
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 | 114.76 | 126.96 | 139.33 | 147.86 | 162.00 | 166.50 | 171.88 | 160.94 | 160.20 | 152.80 | 147.32 | 126.84 | 123.02 | 104.83 | 109.58 | 117.81 | 124.06 | 137.53 | 122.43 | 72.81 |
The cash conversion cycle of Axon Enterprise Inc. has fluctuated over the past five years. The company's cash conversion cycle, which represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales, ranged from a low of 104.83 days on September 30, 2021, to a high of 171.88 days on June 30, 2023.
During this period, Axon's cash conversion cycle showed signs of inefficiency, particularly in the mid to late 2022 and early 2023 period when it exceeded 150 days. This indicates that the company was taking a longer time to sell its inventory and collect cash from customers, potentially leading to liquidity issues and increased working capital requirements.
However, there was an improvement in the cash conversion cycle towards the end of 2024, with the cycle decreasing to 114.76 days on December 31, 2024. This could suggest that Axon made operational changes to streamline its inventory management and accounts receivable processes, leading to a more efficient cash conversion cycle.
Overall, monitoring the cash conversion cycle is crucial for Axon Enterprise Inc. to ensure optimal liquidity management and operational efficiency in converting its resources into cash inflows. Further analysis and comparisons with industry benchmarks can provide valuable insights into the company's working capital management practices.