Etsy Inc (ETSY)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 2.00 | 2.21 | 2.40 | 2.18 | 4.17 |
| Quick ratio | 1.58 | 1.65 | 1.90 | 1.64 | 3.72 |
| Cash ratio | 1.56 | 1.62 | 1.85 | 1.60 | 3.67 |
Based on the provided data, Etsy Inc's liquidity ratios have shown some fluctuations over the years. Let's analyze the key ratios:
1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets. Etsy Inc's current ratio has decreased from 4.17 in 2020 to 2.00 in 2024, indicating a reduction in liquidity. However, the ratio remains above 1, suggesting that the company can meet its short-term obligations.
2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Etsy Inc's quick ratio has also experienced a decline, from 3.72 in 2020 to 1.58 in 2024. This indicates a decreasing ability to cover short-term liabilities without relying on inventory.
3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, focusing solely on a company's cash and cash equivalents to cover short-term liabilities. Etsy Inc's cash ratio has followed a similar trend as the quick ratio, decreasing from 3.67 in 2020 to 1.56 in 2024. This suggests a reduction in the company's ability to settle short-term obligations using only cash resources.
Overall, the decreasing trend in Etsy Inc's liquidity ratios, particularly the quick ratio and cash ratio, indicates a potential concern regarding the company's short-term liquidity position. It is important for investors and stakeholders to monitor these ratios closely to ensure the company can efficiently meet its financial obligations in the short term.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -11.11 | -9.89 | -10.13 | -11.35 | -27.33 |
Etsy Inc's cash conversion cycle has shown a consistent improvement over the years, reflecting efficient management of its working capital. The company's cash conversion cycle decreased from -27.33 days as of December 31, 2020, to -11.11 days as of December 31, 2024.
A negative cash conversion cycle indicates that Etsy is able to sell its inventory, collect receivables, and pay its suppliers within a shorter time frame, leading to a shorter cash cycle and improved liquidity.
This trend suggests that Etsy has been effectively managing its inventory, accounts receivable, and accounts payable, resulting in a more efficient cash flow process. A lower cash conversion cycle also indicates that the company is able to generate cash quickly from its operational activities, providing more flexibility and financial stability.