Etsy Inc (ETSY)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 2.21 | 2.40 | 2.18 | 4.17 | 4.89 |
| Quick ratio | 1.65 | 1.90 | 1.64 | 3.72 | 4.42 |
| Cash ratio | 1.62 | 1.85 | 1.60 | 3.67 | 4.33 |
Etsy Inc's liquidity ratios have shown some fluctuations over the past five years.
The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, decreased from 4.89 in 2019 to 2.21 in 2023. This could indicate a slight decline in Etsy's short-term liquidity position, suggesting that the company may have fewer current assets relative to its current liabilities in recent years.
The quick ratio, also known as the acid-test ratio, remained consistent at 2.21 from 2020 to 2023. This ratio focuses on the most liquid assets (such as cash and equivalents) in relation to current liabilities, providing a more conservative measure of liquidity. The stability of the quick ratio suggests that Etsy has maintained a relatively healthy position in terms of its ability to meet short-term obligations without relying on inventory.
The cash ratio, which specifically measures the company's ability to cover its current liabilities with its cash and cash equivalents, decreased slightly from 4.80 in 2019 to 2.17 in 2023. While the cash ratio has also declined over the years, Etsy still appears to have a strong cash position relative to its short-term obligations.
Overall, while there have been some fluctuations in Etsy Inc's liquidity ratios, the company has generally maintained a solid liquidity position over the years. However, investors and stakeholders may want to monitor these ratios closely to ensure that Etsy continues to manage its short-term obligations effectively.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -9.89 | -10.13 | -11.35 | -27.33 | -28.59 |
The cash conversion cycle of Etsy Inc has shown a gradual improvement over the past five years. The company has successfully reduced its cash conversion cycle from -28.59 days in 2019 to -9.89 days in 2023. This trend indicates that Etsy has been able to efficiently manage its working capital and convert its inventories into cash at a faster pace.
A negative cash conversion cycle signifies that Etsy is able to collect cash from customers before paying its suppliers, thus operating with a negative working capital. This can be advantageous as it enables the company to fund its operations using suppliers' credit before utilizing its own cash resources.
The consistent improvement in the cash conversion cycle indicates that Etsy has been refining its inventory management, accounts receivable collection, and accounts payable payment processes. This efficiency in working capital management is a positive sign for the company's financial health and operational effectiveness.