Duolingo Inc (DUOL)
Liquidity ratios
| Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 3.22 | 3.24 | 3.49 | 3.62 | 3.65 | 3.84 | 4.29 | 4.45 | 4.72 | 5.20 | 6.05 | 1.91 |
| Quick ratio | 2.98 | 3.02 | 3.25 | 3.37 | 3.42 | 3.60 | 4.05 | 4.20 | 4.46 | 4.93 | 5.78 | 1.64 |
| Cash ratio | 2.73 | 2.70 | 2.99 | 3.13 | 3.16 | 3.35 | 3.86 | 4.01 | 4.25 | 4.65 | 5.57 | 1.35 |
Duolingo Inc's liquidity ratios have generally shown a positive trend over time. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has consistently been above 3.0, indicating a strong liquidity position. The current ratio peaked at 6.05 on Dec 31, 2022, and has slightly declined since then but remains at healthy levels.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also displayed a similar trend to the current ratio. It has consistently been above 2.0, reflecting Duolingo's ability to meet its short-term obligations without relying on inventory.
Furthermore, the cash ratio, which assesses the company's ability to cover its current liabilities with cash and cash equivalents, has also shown a positive trend, staying above 2.0 throughout the period in consideration. This indicates that Duolingo has a sufficient amount of cash to meet its short-term obligations if needed.
Overall, based on the liquidity ratios analyzed, Duolingo Inc appears to have a strong liquidity position and the ability to meet its short-term financial obligations comfortably.
Additional liquidity measure
| Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 41.70 | 54.86 | 38.89 | 167.66 | 178.03 | 170.47 | 19.14 | 27.04 | 27.96 |
Duolingo Inc's cash conversion cycle has exhibited significant fluctuations over the past few quarters. The trend indicates that the company has been managing its operating cycle and working capital efficiency with varying levels of success.
On March 31, 2024, the cash conversion cycle stands at 41.70 days, showing an improvement compared to the previous quarter at 54.86 days. This suggests that Duolingo has become more efficient in converting its resources into cash during the most recent quarter.
In contrast, the data reveals a notable deterioration in the cash conversion cycle during the second and third quarters of 2023, where the company experienced significantly longer cycles of 167.66 days and 178.03 days, respectively. This prolonged cycle could indicate challenges in managing inventory levels, collecting receivables, or paying suppliers effectively, leading to cash flow constraints.
The marked improvement in cash conversion cycle in the fourth quarter of 2022 at 19.14 days and the subsequent slight increase in the following quarter at 27.04 days suggest that Duolingo had effectively managed its working capital during that period, but faced challenges in sustaining this performance in the first half of 2023.
Overall, Duolingo Inc's cash conversion cycle has shown volatility, with fluctuations indicating varying levels of efficiency in managing the company's cash flows and working capital. Continuous monitoring and improvement in the cash conversion cycle are essential to ensure the company's financial health and operational effectiveness.