eBay Inc (EBAY)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.24 | 2.44 | 2.18 | 1.97 | 1.80 |
| Quick ratio | 0.97 | 1.99 | 1.75 | 1.58 | 0.96 |
| Cash ratio | 0.97 | 1.99 | 1.75 | 1.58 | 0.96 |
The current ratio for eBay Inc has shown a positive trend over the five-year period from 2020 to 2024, indicating an improvement in the company's short-term liquidity position. The current ratio has increased from 1.80 in 2020 to 2.44 in 2023 before dropping to 1.24 in 2024. This indicates that eBay had $2.44 of current assets to cover every $1 of current liabilities in 2023, which is a strong position. However, the current ratio decreased significantly in 2024, suggesting a potential liquidity concern as the company may have had difficulty meeting its short-term obligations.
In terms of the quick ratio, eBay Inc also demonstrated a favorable liquidity position over the same period. The quick ratio improved from 0.96 in 2020 to 1.99 in 2023, indicating that the company had sufficient liquid assets to cover its immediate liabilities without relying on inventory. However, the quick ratio declined to 0.97 in 2024, which is a cause for potential concern as it indicates a reduced ability to meet short-term obligations without relying on inventory.
The cash ratio for eBay Inc shows a similar trend to the quick ratio, indicating the company's ability to cover its current liabilities with cash and cash equivalents. The cash ratio increased from 0.96 in 2020 to 1.99 in 2023, highlighting a strong cash position. However, the cash ratio dropped to 0.97 in 2024, suggesting a decrease in the company's ability to meet short-term obligations with cash alone.
Overall, while eBay Inc's liquidity ratios have shown improvement over the years, the significant decrease in the current, quick, and cash ratios in 2024 raises some concerns about the company's short-term liquidity position. It would be advisable for the company to monitor its liquidity closely and take appropriate measures to ensure it can meet its financial obligations in a timely manner.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 0.00 | 0.00 | 0.00 | 0.00 | 241.30 |
The cash conversion cycle of eBay Inc has shown a significant improvement in recent years. As of December 31, 2020, the company had a cash conversion cycle of 241.30 days, indicating that it took approximately 241 days to convert its investments in inventory and accounts receivable into cash.
However, starting from December 31, 2021, eBay Inc was able to reduce its cash conversion cycle to 0.00 days and maintained this efficiency in subsequent years through December 31, 2024. This drastic reduction in the cash conversion cycle suggests that the company has optimized its working capital management practices and improved its operational efficiency in converting resources into cash.
A cash conversion cycle of 0.00 days means that eBay Inc is now able to swiftly convert its inventory and accounts receivable into cash, resulting in quicker cash flows and potentially improved liquidity. This efficient management of the cash conversion cycle can positively impact the company's overall financial health and performance.