Doximity Inc (DOCS)

The liquidity ratios of Doximity Inc have shown a significant improvement over the years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, increased from 2.05 in March 2021 to 6.20 in March 2024. This indicates that Doximity has more than enough current assets to meet its current liabilities.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventories from current assets. This ratio improved from 1.89 in March 2021 to 5.88 in March 2024, showing that the company has a strong ability to cover its short-term obligations without relying on inventory.

Furthermore, the cash ratio, which indicates the company's ability to pay off its current liabilities using only its cash and cash equivalents, also displayed a positive trend. It increased from 1.40 in March 2021 to 5.18 in March 2024, indicating that Doximity has a solid cash position to meet its short-term financial obligations.

Overall, Doximity Inc's liquidity ratios highlight the company's improving financial health and its robust ability to meet its short-term financial commitments. The increasing trend in these ratios demonstrates Doximity's strong liquidity position and suggests that the company is well-prepared to handle its short-term cash needs.

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Additional liquidity measure

Doximity Inc's cash conversion cycle shows a fluctuating trend over the years. As of March 31, 2021, the company had a relatively high cash conversion cycle of 139.56 days, indicating that it took a considerable amount of time to convert its investments in inventory and accounts receivable back into cash.

By March 31, 2022, Doximity Inc managed to lower its cash conversion cycle to 81.89 days, suggesting an improvement in its operational efficiency. However, this trend reversed in the following year, as the cash conversion cycle increased to 119.48 days by March 31, 2023.

The company made significant progress in managing its cash conversion cycle by March 31, 2024, reducing it to 63.33 days. This suggests that Doximity Inc was able to optimize its working capital management and convert its assets into cash at a faster rate.

Remarkably, by March 31, 2025, Doximity Inc achieved a cash conversion cycle of 0.00 days, indicating that the company was able to convert its investments into cash almost instantly. This could be a result of efficient inventory management, prompt collection of accounts receivable, and optimized payment of accounts payable.

Overall, Doximity Inc's cash conversion cycle has shown variability over the years, with improvements and fluctuations. The decreasing trend in the cash conversion cycle reflects enhanced operational efficiency and effective management of working capital, leading to more streamlined cash flow operations for the company.