Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
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Liquidity Ratios (Summary)
Align Technology Inc., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
- Current Ratio
- The current ratio demonstrates a general declining trend from the beginning of the period in March 2018 through mid-2020, dropping from 2.26 to 1.22, indicating a reduction in short-term liquidity. Subsequently, there is a modest recovery and stabilization around values between 1.3 and 1.5 through 2021 and early 2022. However, from mid-2022 onwards, the ratio again declines gradually, ending near 1.16 in June 2023 before a slight uptick to 1.27 in September 2023. Overall, the company maintains a current ratio above 1.0 throughout, suggesting it generally has sufficient current assets to cover current liabilities, although the decreasing trend highlights some pressure on liquidity over time.
- Quick Ratio
- The quick ratio follows a similar pattern to the current ratio but shows more pronounced fluctuations. Starting at 1.98 in March 2018, it decreases steadily to a low of 0.93 in June 2020, reflecting reduced liquid assets excluding inventory. After this low point, the quick ratio partially rebounds to values around 1.1 to 1.3 through 2021 but declines again from 2022 onward, reaching a low of 0.88 in June 2023 before a modest recovery to 1.03 by September 2023. This decline below the 1.0 threshold during several quarters indicates some periods where quick assets are not fully sufficient to cover current liabilities, suggesting tighter liquidity conditions in those intervals.
- Cash Ratio
- The cash ratio shows a consistent downward trend throughout the entire period under review. Initially at 1.28 in March 2018, it dips significantly to as low as 0.43 by June 2020. Though there is a slight recovery afterward with fluctuations around 0.5 to 0.8 through 2021 and early 2022, the overall trajectory remains downward, with the ratio oscillating near 0.5 in 2022 and again falling below 0.5 in mid-2023 before reaching 0.6 in the latest period. This indicates a reduction in the most liquid assets (cash and equivalents) relative to current liabilities, underscoring tighter immediate liquidity positions over the years.
- Summary of Liquidity Trends
- The liquidity measures collectively depict a company facing gradual tightening in liquidity over the observed period. While current assets remain generally adequate to cover current liabilities, the declining trends in quick and cash ratios highlight decreasing levels of liquid assets, especially cash and equivalents. This could reflect changes in working capital management, investment in less liquid assets, or shifts in operating cash flow. The periodic recoveries in 2021 suggest some response measures or seasonal effects but did not establish a sustained improvement. The recent slight upticks in ratios as of September 2023 may signal initial improvements or adjustments to liquidity management strategies.
Current Ratio
Align Technology Inc., current ratio calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||
| Current assets | ||||||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||||
| Current ratio1 | ||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Current Ratio, Competitors2 | ||||||||||||||||||||||||||||||
| Abbott Laboratories | ||||||||||||||||||||||||||||||
| Elevance Health Inc. | ||||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | ||||||||||||||||||||||||||||||
| Medtronic PLC | ||||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | ||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals important trends in the company's liquidity position over the observed periods. Current assets demonstrate a general upward trajectory with periodic fluctuations. From March 31, 2018, to December 31, 2019, current assets increased steadily from approximately 1.17 billion to 1.63 billion US dollars. However, there was a notable decline in mid-2020 to around 1.15 billion, followed by a strong recovery and subsequent growth reaching over 2.7 billion by September 30, 2023.
Current liabilities also show an increasing trend across the periods. Starting at approximately 518 million US dollars in March 2018, current liabilities rose consistently, peaking near 1.33 billion by the end of 2020, and continued to increase thereafter, reaching over 2.1 billion by September 2023. This increase in liabilities has outpaced the growth in current assets, especially evident in recent years.
The current ratio, which serves as a key indicator of short-term liquidity, exhibits a declining trend overall. The ratio started at 2.26 in March 2018, indicating strong liquidity, and gradually decreased to 1.68 by December 2019. This decline continued with a sharper drop to 1.22 in June 2020, coinciding with the decrease in current assets during that period. Although there were modest fluctuations and some recovery in the ratio throughout 2021 and 2022, it remained below the initial 2018 levels and ended at 1.27 in September 2023.
Summarizing, while current assets have grown substantially over the timeframe, current liabilities have increased at a faster rate, exerting pressure on liquidity as reflected by the declining current ratio. Despite some recovery periods, the liquidity position remains more constrained compared to earlier years, highlighting a potential area for ongoing monitoring.
- Current Assets
- Generally increased from around 1.17 billion to 2.7 billion US dollars over the period, with a temporary dip in mid-2020.
- Current Liabilities
- Consistently rose from approximately 518 million to over 2.1 billion US dollars, increasing at a faster pace than assets.
- Current Ratio
- Declined from 2.26 to around 1.27 by the end of the period, indicating reduced liquidity despite growth in asset levels.
Quick Ratio
Align Technology Inc., quick ratio calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||||||||||||||||
| Marketable securities, short-term | ||||||||||||||||||||||||||||||
| Accounts receivable, net of allowance for doubtful accounts | ||||||||||||||||||||||||||||||
| Total quick assets | ||||||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||||
| Quick ratio1 | ||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Quick Ratio, Competitors2 | ||||||||||||||||||||||||||||||
| Abbott Laboratories | ||||||||||||||||||||||||||||||
| Elevance Health Inc. | ||||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | ||||||||||||||||||||||||||||||
| Medtronic PLC | ||||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | ||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the periods analyzed. Total quick assets exhibited a general upward trajectory from the beginning of 2018 through the end of 2021, rising from approximately 1.02 billion US dollars to over 2 billion US dollars. This indicates a steady increase in highly liquid assets available to the company, with a peak observed around late 2021. However, starting in 2022, total quick assets showed some fluctuations, decreasing notably in certain quarters before rebounding by the third quarter of 2023 to levels nearing those of late 2021.
Current liabilities followed a broadly increasing pattern over the same time frame. Starting at around 518 million US dollars in early 2018, current liabilities escalated steadily throughout the years, reaching above 2 billion US dollars by the third quarter of 2023. This steady rise in obligations due within one year suggests growing short-term financial commitments or operational scaling.
The quick ratio, calculated as total quick assets divided by current liabilities, provides insight into short-term liquidity and the company's ability to meet imminent liabilities without relying on inventory sales. Early data from 2018 exhibit strong liquidity, with the quick ratio commonly exceeding 1.5, even reaching close to 2 in the first quarter of 2018. However, following this period, there is a marked decline in the quick ratio, dropping below 1 in mid-2020, signaling tighter liquidity conditions where quick assets were insufficient to cover current liabilities promptly.
Subsequent quarters demonstrate a partial recovery in the quick ratio, climbing back above 1 by the end of 2020 and maintaining moderate liquidity above 1 through much of 2021. However, in 2022 and 2023, the ratio hovers near or just below 1, indicating slender liquidity buffers and suggesting potential vulnerability in covering short-term obligations without difficulty. The slight improvement observed in the third quarter of 2023, with the quick ratio surpassing 1 again, may indicate an enhancement in liquidity management or accrued quick assets.
- Total Quick Assets
- Displayed a robust growth trend from 2018 through 2021, followed by volatility with decreases and partial recoveries in 2022–2023.
- Current Liabilities
- Consistently increased over the entire period, more than tripling from early 2018 to late 2023, evidencing rising short-term financial obligations.
- Quick Ratio
- Started at a comfortable liquidity level well above 1.5 but experienced a significant decline in 2020, falling below 1 briefly. It recovered somewhat afterward but remained near or under 1 in recent periods, reflecting tighter liquidity conditions.
Overall, the company’s liquidity, as indicated by the quick ratio, has become more constrained since 2020 despite continued growth in quick assets and rising current liabilities. This reflects a balance of expanding financial commitments and fluctuating immediacy of liquid assets, which merits close monitoring to ensure ongoing short-term financial stability.
Cash Ratio
Align Technology Inc., cash ratio calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||||||||||||||||
| Marketable securities, short-term | ||||||||||||||||||||||||||||||
| Total cash assets | ||||||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||||
| Cash ratio1 | ||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Cash Ratio, Competitors2 | ||||||||||||||||||||||||||||||
| Abbott Laboratories | ||||||||||||||||||||||||||||||
| Elevance Health Inc. | ||||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | ||||||||||||||||||||||||||||||
| Medtronic PLC | ||||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | ||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets displayed a generally increasing trend from early 2018 through late 2019, reaching a peak at the end of 2019. In the first half of 2020, a notable decline occurred, with cash assets dropping significantly by June 30, 2020. Following this dip, cash assets recovered robustly through 2020 and 2021, achieving new highs by late 2021. However, during 2022, there was a downward correction with fluctuations, but overall, cash assets remained relatively stable. By the third quarter of 2023, cash assets showed an upward movement, surpassing previous quarters in 2023.
- Current Liabilities
- Current liabilities consistently increased throughout the observed period. From the start of 2018, a steady rise is evident quarter-over-quarter, with the largest increments occurring post-2019. The data shows a particularly sharp increase across 2020 and continuing through to 2023. By the third quarter of 2023, current liabilities reached their highest recorded value in the period analyzed. This persistent increase indicates a growing short-term financial obligation for the company.
- Cash Ratio
- The cash ratio demonstrated a declining trend over the observed period. Starting from above 1.0 in early 2018, it progressively decreased, falling below 1.0 in mid-2018 and continuing its descent into 2020. A significant drop is visible by mid-2020, when the ratio fell below 0.5, indicating a reduced ability to cover current liabilities with cash assets alone. Although some fluctuations occurred in subsequent quarters, the cash ratio generally remained below 0.7, reflecting a tighter liquidity position. Most recently, the ratio showed modest improvement, closing around 0.6 by the third quarter of 2023, which, while better than the mid-2020 lows, still suggests limited cash coverage relative to current liabilities.