Alphabet Inc Class A (GOOGL)
Liquidity ratios
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 2.10 | 2.04 | 2.17 | 2.35 | 2.38 | 2.52 | 2.81 | 2.87 | 2.93 | 2.98 | 3.15 | 3.10 | 3.07 | 3.41 | 3.41 | 3.66 | 3.37 | 3.78 | 3.98 | 3.96 |
| Quick ratio | 1.94 | 1.87 | 2.02 | 2.20 | 2.22 | 2.31 | 2.64 | 2.74 | 2.80 | 2.86 | 3.03 | 2.95 | 2.96 | 3.28 | 3.27 | 3.51 | 3.25 | 3.63 | 3.85 | 3.80 |
| Cash ratio | 1.36 | 1.39 | 1.52 | 1.67 | 1.64 | 1.76 | 2.04 | 2.16 | 2.17 | 2.30 | 2.44 | 2.44 | 2.41 | 2.75 | 2.77 | 2.92 | 2.65 | 3.09 | 3.27 | 3.25 |
The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has shown a decreasing trend from 2.87 in Mar 31, 2022, to 2.10 in Dec 31, 2023. This indicates a potential decrease in Alphabet Inc's short-term liquidity over this period.
Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown a decreasing trend from 2.85 in Mar 31, 2022, to 2.01 in Sep 30, 2023. This suggests a relatively lower ability to meet short-term obligations without relying on inventory.
The cash ratio, which measures the firm's ability to cover short-term liabilities with its cash and cash equivalents, has also displayed a declining trend, falling from 2.27 in Mar 31, 2022, to 1.51 in Dec 31, 2023. This indicates a potential reduction in Alphabet Inc's immediate liquidity position.
Overall, the liquidity ratios of Alphabet Inc have been on a downward trajectory over the periods indicated, signifying a potential decrease in the company's ability to cover short-term obligations with its current assets and cash reserves.
Additional liquidity measure
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 36.80 | 42.89 | 40.50 | 41.09 | 45.09 | 37.49 | 41.33 | 41.67 | 41.12 | 41.60 | 40.42 | 37.21 | 42.10 | 38.12 | 32.04 | 36.45 | 38.99 | 35.05 | 35.93 | 33.88 |
The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A lower value indicates a more efficient use of capital and quicker turnover of resources.
Analyzing the cash conversion cycle of Alphabet Inc over the last eight quarters, we observe a fluctuating trend. The cycle was at its lowest at 36.43 days on December 31, 2023, indicating efficient management in converting investments into sales and cash. However, it increased to 42.47 days on September 30, 2023, reflecting a longer time period to convert investments into cash.
The variations in the cash conversion cycle may be attributed to changes in business operations, inventory management, and receivables collection efficiency. It is essential for investors and analysts to closely monitor this trend to assess Alphabet Inc's effectiveness in managing working capital and generating cash flows from its operational activities.