Doximity Inc (DOCS)

Doximity Inc's liquidity ratios indicate a strong ability to meet its short-term obligations with its current assets. The current ratio, which measures the company's ability to pay its current liabilities with its current assets, has shown a decreasing trend over the three years, from 8.12 in 2022 to 6.99 in 2023, and further to 6.20 in 2024. This may suggest a slight decrease in the company's short-term liquidity position.

The quick ratio, also known as the acid-test ratio, paints a similar picture, showing a decrease from 7.10 in 2022 to 6.58 in 2023, and then to 5.88 in 2024. This ratio excludes inventories from current assets, providing a more conservative measure of liquidity. The downward trend in the quick ratio also indicates a slight reduction in Doximity Inc's ability to cover its short-term liabilities without relying on inventory.

Moreover, the cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, has also decreased over the years. It decreased from 6.36 in 2022 to 5.80 in 2023, and then to 5.18 in 2024. This indicates a decrease in the proportion of cash and cash equivalents relative to current liabilities, which may raise some concerns about the company's immediate liquidity position.

Overall, while Doximity Inc's liquidity ratios remained at healthy levels, the decreasing trend in these ratios over the years suggests a slight decline in the company's short-term liquidity position. Further monitoring and analysis of the company's liquidity management may be warranted to ensure its ability to meet its short-term obligations efficiently.

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Additional liquidity measure

The cash conversion cycle of Doximity Inc has shown fluctuations over the past three fiscal years. In March 31, 2024, the company's cash conversion cycle improved significantly to 63.33 days, indicating that Doximity Inc is managing its working capital more efficiently and converting its investments into cash at a faster pace. This shorter cash conversion cycle suggests that the company is collecting payments from customers quicker and managing its inventory and payables effectively.

In contrast, in March 31, 2023, Doximity Inc experienced a prolonged cash conversion cycle of 121.40 days, reflecting a slower turnaround time in converting its investments into cash. This extended cash conversion cycle may imply inefficiencies in the company's working capital management, possibly due to slower collections from customers, excessive inventory levels, or delayed payments to suppliers.

Between March 31, 2023, and March 31, 2022, the cash conversion cycle decreased to 83.38 days. Although an improvement from the previous year, the company's cash conversion cycle remained relatively high, suggesting that Doximity Inc could further optimize its working capital processes to enhance efficiency and liquidity.

Overall, understanding Doximity Inc's cash conversion cycle provides insights into the company's operational efficiency, liquidity management, and effectiveness in managing working capital. By continually monitoring and improving its cash conversion cycle, Doximity Inc can enhance its financial performance and strengthen its overall financial health.