Trade Desk Inc (TTD)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.86 | 1.72 | 1.90 | 1.71 | 1.57 |
| Quick ratio | 1.83 | 1.69 | 1.87 | 1.65 | 1.50 |
| Cash ratio | 0.67 | 0.55 | 0.71 | 0.53 | 0.42 |
The liquidity ratios of Trade Desk Inc. demonstrate a generally positive trajectory over the period from December 31, 2020, to December 31, 2024.
The current ratio, which assesses the company's ability to meet short-term obligations with current assets, increased from 1.57 in 2020 to a peak of 1.90 in 2022. After a slight decline to 1.72 in 2023, it rose again to 1.86 in 2024. This trend indicates a consistently healthy liquidity position, with current assets sufficiently covering current liabilities, and a trend toward stronger liquidity in the most recent years.
The quick ratio, reflecting the company's ability to cover short-term liabilities with its most liquid assets (excluding inventories), shows a similar pattern. It increased from 1.50 in 2020 to 1.87 in 2022, followed by a slight decline to 1.69 in 2023, and then an increase to 1.83 in 2024. This suggests that the company's ability to meet immediate obligations with liquid assets has remained relatively stable and strong throughout the period.
The cash ratio, which measures the proportion of current liabilities funded solely by cash and cash equivalents, increased from 0.42 in 2020 to 0.71 in 2022. It declined slightly to 0.55 in 2023 before reaching 0.67 in 2024. Although still below 1.0, the upward trend indicates an improving liquidity position in terms of cash holdings available to cover short-term liabilities.
Overall, the data indicates that Trade Desk Inc. has maintained solid liquidity ratios over the analyzed period, with improvements observed particularly in 2022 and 2024. The ratios suggest a stable financial foundation for meeting short-term obligations, with a consistent presence of liquid assets in proportion to current liabilities.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -1,537.47 | -1,775.20 | -1,886.80 | -2,111.21 | -2,060.99 |
The provided data on the cash conversion cycle (CCC) of Trade Desk Inc. reveals a consistently negative and improving trend over the period from December 31, 2020, through December 31, 2024. The values are as follows:
- December 31, 2020: -2,060.99 days
- December 31, 2021: -2,111.21 days
- December 31, 2022: -1,886.80 days
- December 31, 2023: -1,775.20 days
- December 31, 2024: -1,537.47 days
A negative cash conversion cycle indicates that the company is able to generate cash from operations before paying for its inventory and other operational expenses, reflecting a highly efficient operational cycle. The trend over the years shows a gradual reduction in the magnitude of the negative number, from -2,060.99 days in 2020 to -1,537.47 days in 2024, signifying progressive improvement in the company's working capital management.
This decreasing negativity suggests that Trade Desk Inc. is shortening the length of time it takes to convert its operations into cash, thereby increasing liquidity and operational efficiency. The reduction without crossing into positive territory indicates the company continues to operate with a cash inflow ahead of its outgoing payments, which can be advantageous for liquidity management and reducing reliance on external financing.
Overall, the trend demonstrates a consistent enhancement in the efficiency of the company's cash cycle, aligning with strong working capital practices and possibly reflecting effective receivables collection and payables management strategies.