DigitalOcean Holdings Inc (DOCN)

DigitalOcean Holdings Inc has shown relatively stable liquidity ratios over the past few quarters. The current ratio has been consistently above 2, indicating that the company has more than enough current assets to cover its current liabilities. The quick ratio, which excludes inventory from current assets, follows a similar trend to the current ratio. This suggests that the company has a strong ability to meet its short-term obligations without relying on inventory.

The cash ratio, which is the most stringent measure of liquidity as it only includes cash and cash equivalents, also remains above 2 across the periods analyzed. This indicates that DigitalOcean has a solid cash position relative to its current liabilities, providing a strong cushion for any short-term financial needs.

Overall, DigitalOcean Holdings Inc demonstrates a strong liquidity position based on its current, quick, and cash ratios, suggesting that the company is well-equipped to meet its short-term financial obligations.

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Additional liquidity measure

The cash conversion cycle of DigitalOcean Holdings Inc has displayed significant fluctuations over the past few quarters. The cycle represents the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

In the most recent quarter, ending March 31, 2024, the cash conversion cycle stood at 26.90 days, showing a slight improvement from the previous quarter's figure of 27.67 days. This indicates that the company was able to manage its working capital more efficiently during this period.

In the quarter ended December 31, 2023, the cash conversion cycle was relatively high at 27.67 days, suggesting that the company took longer to convert its investments into cash flow compared to the preceding quarter.

The company saw a significant improvement in its cash conversion cycle in the quarter ended September 30, 2023, where it was only 13.21 days. This suggests that DigitalOcean Holdings Inc was able to streamline its operations and convert investments into cash at a faster rate during this period.

However, in the quarter ended June 30, 2023, the cash conversion cycle increased to 18.38 days, indicating a slight slowdown in the conversion of resources into cash flow compared to the previous quarter.

Looking back further, in the quarter ended March 31, 2023, the company also performed well with a cash conversion cycle of 15.69 days, showcasing efficient working capital management.

On the other hand, the company faced challenges in managing its cash conversion cycle in the quarters ended December 31, 2022, and September 30, 2022, where the cycle was negative (-2.31 days and -2.77 days, respectively). These negative values may suggest that DigitalOcean Holdings Inc had some inefficiencies in managing its working capital during these periods.

In the quarter ended June 30, 2022, the cash conversion cycle jumped to 61.80 days, indicating a significant delay in converting investments into cash flow, which could have impacted the company's liquidity position.

The company managed to improve its cash conversion cycle in the quarters ended March 31, 2022, and December 31, 2021, where it was 0.15 days and 6.66 days, respectively.

Overall, the fluctuations in DigitalOcean Holdings Inc's cash conversion cycle indicate varying efficiency in managing its working capital and converting investments into cash flow over the analyzed periods.