Trade Desk Inc (TTD)

The liquidity ratios of Trade Desk Inc., as reflected over the provided period, depict a company maintaining a stable short-term liquidity position.

The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, has generally hovered around 1.7 to 1.9 throughout the period. Notably, the ratio peaked slightly at 1.92 in June 2022 and remained relatively steady through 2022 and early 2023, indicating that the company's current assets consistently exceeded current liabilities by approximately 70% to 90%. There was a noticeable decline to 1.72 at the end of 2023, followed by a modest recovery to approximately 1.80 in mid-2024. However, the ratio dipped back to 1.71 by June 2025, suggesting a slight reduction in liquidity buffer but still within a reasonable range that indicates sound liquidity management.

The quick ratio, which excludes inventory and other less liquid assets to focus on the most liquid assets such as receivables and cash, has largely tracked the current ratio's trend. Values primarily ranged from about 1.50 to 1.88, indicating that the company has maintained a strong position of liquid assets relative to its immediate liabilities. The quick ratio reached as high as 1.88 in September 2022, reflecting a robust liquidity position during that period. Similar to the current ratio, the quick ratio experienced slight fluctuations but remained comfortably above 1, indicating that Trade Desk Inc. possesses sufficient liquid assets to cover its short-term liabilities without the need to liquidate inventory.

The cash ratio, which provides the most conservative measure of liquidity by comparing cash and cash equivalents to current liabilities, displayed more variability but maintained a generally high level relative to other ratios. The cash ratio ranged between approximately 0.42 to 0.74 over the period, with a peak of 0.74 in September 2022. The ratios consistently remained above 0.5 from September 2020 through mid-2024, signifying that the company usually retained enough cash and cash equivalents to cover at least half of its current liabilities, reinforcing a healthy liquidity buffer. Toward the end of the period, the cash ratio declined to about 0.57, but still indicated a reasonable level of cash reserves for short-term obligations.

Overall, the trend in liquidity ratios suggests that Trade Desk Inc. has maintained stable liquidity levels throughout the period, with ratios comfortably above critical thresholds that typically signify financial distress. The consistency across the current, quick, and cash ratios demonstrates prudent liquidity management, ensuring the company's ability to meet its short-term liabilities in both normal and slightly adverse conditions.

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Additional liquidity measure

The analysis of the Trade Desk Inc.'s cash conversion cycle (CCC) over the specified periods reveals a predominantly negative and highly extended cycle, indicating that the company consistently operates with its accounts receivable and accounts payable cycles overlapping significantly.

From September 30, 2020, through December 31, 2024, the CCC remained deeply negative, fluctuating between approximately -1,356 days and -2,111 days. The most negative value observed was -2,111.21 days at the end of December 2021, signifying that the company's accounts payable period vastly exceeds its receivables and inventory holding period, effectively meaning the company defers payments to suppliers longer than it collects from clients.

Throughout this period, the CCC exhibits some fluctuations but maintains a broadly consistent, highly negative trend. For instance, after reaching its peak negativity around late 2021, it appears to fluctuate within the range of approximately -1,550 to -2,111 days. These fluctuations could suggest variations in operational efficiency, payment terms, or changes in credit policies, but no sustained shift towards a positive or less negative cycle is evident.

Post-December 2024, the CCC showed signs of a gradual improvement, with a less negative value at -1,537.47 days as of December 31, 2024, and subsequent data up to June 2025 indicates a continuation of this trend towards a less negative cycle, reaching approximately -1,358.65 days by June 2025. This gradual movement suggests possible enhancements in working capital management, shorter receivables periods, or adjustments in payables practices.

Overall, the persistently negative and large magnitude of the cash conversion cycle underscores the company's reliance on extended accounts payable periods, enabling it to operate with minimal net working capital. The trend toward less negative values indicates potential operational efficiencies or strategic changes aimed at optimizing cash flow, but as of the most recent data, the company continues to largely rely on a significantly negative cash conversion cycle, characteristic of a highly cash-generative and operationally flexible business model.