Etsy Inc (ETSY)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | 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 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 2.00 | 2.39 | 2.41 | 2.49 | 2.21 | 2.45 | 2.81 | 2.69 | 2.40 | 2.72 | 2.93 | 2.68 | 2.18 | 2.29 | 6.61 | 4.43 | 4.17 | 4.98 | 4.27 | 5.71 |
| Quick ratio | 1.58 | 1.91 | 1.79 | 1.88 | 1.65 | 1.82 | 2.18 | 2.14 | 1.90 | 2.14 | 2.28 | 2.08 | 1.64 | 1.78 | 6.15 | 3.96 | 3.72 | 4.52 | 3.79 | 5.14 |
| Cash ratio | 1.56 | 1.89 | 1.77 | 1.85 | 1.62 | 1.78 | 2.14 | 2.08 | 1.85 | 2.09 | 2.24 | 2.03 | 1.60 | 1.73 | 6.10 | 3.90 | 3.67 | 4.47 | 3.73 | 5.06 |
Etsy Inc's liquidity ratios provide insights into the company's ability to meet its short-term obligations.
1. Current Ratio: The current ratio for Etsy Inc has shown some fluctuations over the years but has generally remained above 2, indicating that the company has more than enough current assets to cover its short-term liabilities. The current ratio peaked at 6.61 on June 30, 2021, suggesting a strong liquidity position at that point. However, the ratio has since decreased to around 2.00 as of December 31, 2024, indicating a potential decline in liquidity.
2. Quick Ratio: The quick ratio, which excludes inventory from current assets, paints a slightly different picture. The ratio has also fluctuated over the years but has generally been lower than the current ratio. This suggests that Etsy Inc may have a sizable amount of inventory relative to its current liabilities. The quick ratio dipped to as low as 1.58 on December 31, 2024, indicating a potential liquidity challenge at that point.
3. Cash Ratio: The cash ratio, which is the most conservative liquidity measure as it only considers cash and cash equivalents, shows how well Etsy Inc can meet its short-term liabilities with its most liquid assets. The cash ratio has followed a similar trend to the quick ratio, being lower than the current ratio. As of December 31, 2024, the cash ratio stood at 1.56, which may indicate that the company's ability to meet immediate obligations solely with cash is limited.
In conclusion, while Etsy Inc has generally maintained a current ratio above 2, suggesting a healthy liquidity position, the declining trend in the quick and cash ratios, especially towards the end of the observed period, raises some concerns about the company's ability to quickly cover its short-term obligations using its most liquid assets. Further monitoring of these ratios is advisable to assess any potential liquidity risks.
See also:
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | 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 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -11.11 | -7.67 | -4.49 | -2.32 | -9.89 | -3.86 | -3.89 | -5.82 | -10.13 | -5.24 | -6.21 | -5.19 | -11.35 | -4.27 | -13.90 | -7.29 | -27.33 | -15.64 | -11.13 | -7.94 |
The Cash Conversion Cycle (CCC) for Etsy Inc over the past few years has shown a trend of generally negative days, indicating efficient management of working capital. A negative CCC means the company is taking fewer days to convert its investments in inventory and accounts receivable into cash received from sales.
The analysis reveals fluctuations in the CCC over the quarters, with some periods showing a more improved cycle than others. From December 31, 2020, to March 31, 2021, there was a notable increase from -27.33 days to -7.29 days, indicating a slight delay in the cash conversion process. Subsequently, from March 31, 2021, to September 30, 2021, there was a significant improvement in efficiency, with the CCC declining to -4.27 days.
The CCC continued to fluctuate within a relatively narrow range between negative 3 to negative 15 days until December 31, 2024. Notably, as of December 31, 2024, the CCC stood at -11.11 days, indicating a slight increase in the cycle compared to the previous quarter.
Overall, the negative values of the CCC suggest that Etsy Inc has effectively managed its operating cycle, reflecting a quick turnover of inventory and accounts receivable into cash receipts. Efficient management of the CCC is crucial for maintaining liquidity and optimizing working capital resources.