DoorDash, Inc. Class A Common Stock (DASH)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.66 | 1.64 | 1.86 | 2.59 | 3.94 |
| Quick ratio | 1.40 | 1.35 | 1.54 | 2.33 | 3.67 |
| Cash ratio | 1.20 | 1.20 | 1.38 | 2.13 | 3.47 |
The liquidity ratios of DoorDash, Inc. Class A Common Stock demonstrate notable trends over the years from 2020 through 2024.
The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, shows a declining pattern. It decreased from 3.94 at the end of 2020 to 2.59 in 2021, and continued to decline to 1.86 in 2022. The ratio further declined to 1.64 in 2023 but increased slightly to 1.66 in 2024. This trend indicates that while the company's ability to meet short-term obligations has diminished over the years, it remained above 1.6 as of 2024, suggesting it still maintains a reasonable buffer but with reduced liquidity cushion compared to earlier periods.
The quick ratio, which refines the measure by excluding inventory from current assets, followed a similar downward trajectory. It declined from 3.67 in 2020 to 2.33 in 2021, then further to 1.54 in 2022. The ratio continued to decrease to 1.35 in 2023 before slightly increasing to 1.40 in 2024. This pattern suggests a consistent reduction in the company's immediate liquidity position, although it still maintains a ratio well above 1, indicating the company's capacity to meet short-term liabilities without relying on inventory sales.
The cash ratio, a more stringent liquidity measure focusing solely on cash and cash equivalents relative to current liabilities, also shows a declining trend. It decreased from 3.47 in 2020 to 2.13 in 2021, then down to 1.38 in 2022. In 2023, the ratio further diminished to 1.20 and remained stable into 2024 at 1.20. This indicates that DoorDash's immediate liquidity position in terms of cash and cash equivalents experienced a consistent decline but has stabilized at a level that still exceeds its short-term liabilities on balance.
Overall, the data reveal a pattern of diminishing liquidity ratios over the examined period, reflecting a reduction in the company's short-term liquidity buffer. Nevertheless, the ratios remain above 1 across all measures, signaling that DoorDash continues to possess sufficient liquidity to cover its short-term obligations though with a narrower margin than in earlier years.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 8.31 | 33.67 | 51.07 | 0.93 | 15.46 |
The cash conversion cycle (CCC) of DoorDash, Inc. Class A Common Stock has exhibited notable variation over the period from December 31, 2020, to December 31, 2024. At the end of 2020, the CCC was relatively moderate at approximately 15.46 days, indicating a balanced period between cash outflows for inventories and receivables and inflows from sales. By December 31, 2021, the CCC had significantly decreased to approximately 0.93 days, approaching near-zero levels, which suggests an improved efficiency in converting investments in working capital into cash, possibly driven by streamlined operations or changes in revenue collection and inventory management.
However, this efficiency was not sustained, as the CCC increased substantially to about 51.07 days by the end of 2022. This escalation implies a lengthening of the cycle, potentially reflecting longer credit periods extended to customers, increased inventory holding, or delays in receivables collection. The rise in the cycle duration could also indicate some operational challenges or strategic shifts affecting cash flow timing.
Subsequent to this peak, the CCC demonstrated a notable improvement, decreasing to approximately 33.67 days at the close of 2023. This reduction signifies some operational improvements or adjustments in receivables and inventory management. The trend of decreasing cycle duration persisted into 2024, with the CCC reaching approximately 8.31 days, approaching near-term operational efficiencies and indicating a much faster conversion of working capital into cash.
Overall, the cash conversion cycle for DoorDash, Inc. has shown considerable fluctuation over this timeframe, characterized by an initial improvement, followed by a period of deterioration, and subsequent recovery. The recent decline to a low of around 8.31 days underscores enhanced operational efficiency and liquidity management, reducing the cash cycle duration to levels that may reflect more optimized working capital processes.