Dolby Laboratories (DLB)
Liquidity ratios
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 2.86 | 3.52 | 4.72 | 5.58 | 5.79 |
| Quick ratio | 2.32 | 3.07 | 4.18 | 5.05 | 5.10 |
| Cash ratio | 1.15 | 2.09 | 2.92 | 4.00 | 4.19 |
Based on the provided data on Dolby Laboratories' liquidity ratios from 2020 to 2024, we can observe the following trends:
1. Current Ratio: The current ratio of Dolby Laboratories has exhibited a declining trend over the five-year period, starting at 5.79 in 2020 and decreasing to 2.86 in 2024. This ratio measures the company's ability to cover its short-term obligations with its current assets. A higher current ratio is generally preferred as it indicates a stronger ability to meet short-term liabilities.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, reflects Dolby Laboratories' ability to meet short-term obligations without relying on the sale of inventory. Similar to the current ratio, the quick ratio of Dolby has also decreased over the five-year period, from 5.10 in 2020 to 2.32 in 2024.
3. Cash Ratio: The cash ratio represents the most conservative liquidity measure, focusing solely on the company's ability to cover short-term liabilities with its cash and cash equivalents. Dolby Laboratories' cash ratio has followed a decreasing trend from 4.19 in 2020 to 1.15 in 2024.
Overall, the downward trends in Dolby Laboratories' liquidity ratios indicate a declining ability to cover short-term obligations over the five-year period. While the company still maintains ratios above 1, suggesting a sufficient liquidity position, the decreasing values may warrant further investigation into the company's cash management and working capital efficiency to ensure ongoing financial stability.
Additional liquidity measure
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 182.68 | 151.04 | 126.25 | 74.91 | 108.39 |
The cash conversion cycle of Dolby Laboratories has shown fluctuations over the past five years. It increased from 108.39 days in 2020 to 182.68 days in 2024, indicating a longer period required to convert its investments in inventory and accounts receivable into cash.
The longer cash conversion cycle in 2024 may suggest that Dolby Laboratories is taking more time to sell its inventory and collect accounts receivable. This could potentially impact the company's liquidity and working capital management.
On the other hand, the decrease in the cash conversion cycle from 2022 to 2023 indicates an improvement in the company's efficiency in managing its working capital and converting it into cash more quickly.
Overall, Dolby Laboratories should closely monitor its cash conversion cycle to ensure efficient management of its working capital and improve its liquidity position.