Alphabet Inc Class C (GOOG)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.84 | 2.10 | 2.38 | 2.93 | 3.07 |
| Quick ratio | 1.66 | 1.94 | 2.22 | 2.80 | 2.96 |
| Cash ratio | 1.07 | 1.36 | 1.64 | 2.17 | 2.41 |
Based on the provided data, we can analyze Alphabet Inc Class C's liquidity ratios over the five-year period from 2020 to 2024.
1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets. A ratio above 1 indicates that the company has more current assets than current liabilities.
- Alphabet Inc Class C's current ratio decreased from 3.07 in 2020 to 1.84 in 2024. This declining trend indicates a reduction in the company's ability to meet its short-term obligations over the years.
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. It focuses on the company's most liquid assets.
- Alphabet Inc Class C's quick ratio decreased from 2.96 in 2020 to 1.66 in 2024, also showing a declining trend in its ability to fulfill short-term obligations without relying on inventory.
3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, as it only considers the company's cash and cash equivalents to cover its current liabilities.
- Alphabet Inc Class C's cash ratio declined from 2.41 in 2020 to 1.07 in 2024, reflecting a decreasing ability to pay off short-term debts solely with cash holdings.
Overall, the decreasing trend in all three liquidity ratios (current ratio, quick ratio, and cash ratio) for Alphabet Inc Class C suggests potential liquidity challenges the company may face in meeting its short-term financial obligations. It could indicate a need for the company to improve its cash management or reduce its short-term liabilities to enhance its liquidity position in the future.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 34.82 | 36.78 | 45.13 | 41.04 | 41.82 |
The cash conversion cycle of Alphabet Inc Class C has shown some fluctuations over the years based on the provided data.
- As of December 31, 2020, the cash conversion cycle was 41.82 days, indicating that Alphabet took around 41.82 days to convert its investments in inventory and other resources into cash.
- By December 31, 2021, the cash conversion cycle had slightly decreased to 41.04 days, suggesting an improvement in the efficiency of Alphabet's working capital management.
- However, by December 31, 2022, the cash conversion cycle increased to 45.13 days, indicating a slight delay in converting investments into cash compared to the previous year.
- The trend reversed by December 31, 2023, with the cash conversion cycle decreasing to 36.78 days, implying Alphabet was able to convert its investments into cash more quickly.
- By December 31, 2024, the cash conversion cycle further improved to 34.82 days, indicating a continued efficiency in working capital management.
Overall, despite some fluctuations, Alphabet Inc Class C has shown a general trend towards improving its cash conversion cycle, reflecting effective management of its working capital and potential operational efficiency.