DexCom Inc (DXCM)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 2.84 | 1.99 | 5.11 | 5.58 | 5.47 |
| Quick ratio | 2.39 | 1.74 | 4.06 | 5.11 | 5.05 |
| Cash ratio | 1.75 | 1.33 | 3.35 | 4.41 | 4.26 |
Dexcom Inc's liquidity ratios indicate the company's ability to meet its short-term financial obligations effectively.
The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, improved over the past five years. In 2023, the current ratio stood at 2.84, which means the company had $2.84 in current assets for every $1 in current liabilities. This increase from 2019 indicates a strengthening liquidity position.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Dexcom's quick ratio also demonstrated an upward trend, reaching 2.48 in 2023. This suggests that Dexcom has an increased ability to meet its short-term obligations using only its most liquid assets.
The cash ratio, which is the most conservative liquidity measure as it considers only cash and cash equivalents, also showed improvement over the years. In 2023, the cash ratio was 1.84, meaning that Dexcom had $1.84 in cash and cash equivalents for every $1 in current liabilities.
Overall, Dexcom Inc's liquidity position appears to have strengthened over the past five years based on the current, quick, and cash ratios. This indicates that the company's ability to meet its short-term obligations and sustain its operations has improved, which is a positive indicator for potential investors and creditors.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 140.83 | 107.16 | 117.64 | 106.35 | 80.79 |
The cash conversion cycle of Dexcom Inc has fluctuated over the past five years. In 2023, it increased to 177.03 days from 118.81 days in 2022, indicating a significant delay in converting its investments in inventory and receivables into cash. This may raise concerns about the efficiency of the company's working capital management. Comparing to 2021 and 2020, where the cycle was 153.33 days and 121.48 days respectively, the cycle has lengthened in 2023. However, in 2019, the cash conversion cycle was significantly lower at 82.53 days, suggesting that the company was more effective in managing its working capital that year. Overall, Dexcom Inc should focus on improving its working capital management to shorten the cash conversion cycle and enhance its cash flow efficiency.