Shutterstock (SSTK)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.65 | 0.56 | 1.16 | 1.90 | 1.53 |
| Quick ratio | 0.42 | 0.48 | 1.08 | 1.84 | 1.42 |
| Cash ratio | 0.22 | 0.30 | 0.94 | 1.67 | 1.23 |
Based on the liquidity ratios provided for Shutterstock Inc over the five-year period, we can observe a consistent declining trend in the current ratio, quick ratio, and cash ratio. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has decreased from 1.53 in 2019 to 0.65 in 2023. Similarly, the quick ratio, also known as the acid-test ratio, has followed the same declining trend from 1.53 in 2019 to 0.65 in 2023.
The cash ratio, which provides the most conservative measure of liquidity by comparing cash and cash equivalents to current liabilities, has also seen a decline from 1.34 in 2019 to 0.45 in 2023. This trend suggests that Shutterstock Inc may be facing challenges in maintaining its short-term liquidity position and may need to closely monitor its cash flow management to ensure it can meet its current obligations.
Overall, the declining trend in these liquidity ratios indicates a potential liquidity risk for the company, highlighting the need for management to carefully assess and manage its working capital and cash flow to maintain its financial health.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 33.67 | 26.01 | 16.82 | 22.26 | 22.58 |
Shutterstock Inc's cash conversion cycle has exhibited fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 28.61 days from 21.31 days in 2022. This indicates that, on average, it took the company 28.61 days to convert its investments in inventory and accounts receivable into cash.
Comparing this to prior years, we see a significant increase from the 2021 figure of 9.25 days when the company was able to convert its investments into cash much quicker. In 2020 and 2019, the cash conversion cycle was 20.57 days and 18.37 days respectively, showing a trend of increased efficiency in recent years up until 2021.
The increase in the cash conversion cycle in 2023 may suggest potential issues in managing inventory or collecting receivables efficiently, leading to a longer time to convert investments into cash. Analysts may want to further investigate the underlying causes of this increase to assess its impact on the company's overall liquidity and profitability.