DigitalOcean Holdings Inc (DOCN)
Cash ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 428,446 | 317,236 | 140,772 | 1,713,390 |
| Short-term investments | US$ in thousands | 0 | 94,532 | 723,462 | 0 |
| Total current liabilities | US$ in thousands | 220,955 | 192,645 | 165,516 | 58,239 |
| Cash ratio | 1.94 | 2.14 | 5.22 | 29.42 |
December 31, 2024 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($428,446K
+ $0K)
÷ $220,955K
= 1.94
The cash ratio of DigitalOcean Holdings Inc has shown a declining trend over the years. As of December 31, 2021, the company had a robust cash ratio of 29.42, indicating a strong ability to cover its short-term liabilities with cash and cash equivalents. However, by December 31, 2022, the cash ratio decreased to 5.22, suggesting a substantial reduction in liquidity compared to the previous year.
The downward trend continued in the subsequent years, with the cash ratio further declining to 2.14 as of December 31, 2023, and then to 1.94 by December 31, 2024. These decreasing values reflect a diminishing ability of DigitalOcean Holdings Inc to meet its short-term obligations solely with its available cash and cash equivalents.
Overall, the declining cash ratio of DigitalOcean Holdings Inc raises concerns about its liquidity position and ability to manage short-term financial obligations effectively. It may indicate a need for the company to improve its cash management practices to maintain sufficient liquidity levels for operational needs and financial stability.
Peer comparison
Dec 31, 2024