Stock Analysis on Net

AppLovin Corp. (NASDAQ:APP)

Analysis of Liquidity Ratios 

Microsoft Excel

Liquidity Ratios (Summary)

AppLovin Corp., liquidity ratios

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Current ratio 2.19 1.71 3.35 5.05
Quick ratio 2.04 1.54 3.08 4.82
Cash ratio 0.70 0.53 1.87 4.02

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).


Current Ratio
The current ratio exhibits a declining trend from 5.05 at the end of 2021 to 1.71 by the end of 2023, followed by a slight recovery to 2.19 in 2024. This indicates a decrease in the company's short-term liquidity position initially, with some improvement in the most recent period. Despite this recovery, the ratio remains significantly lower than in 2021, suggesting less cushion to cover short-term liabilities with current assets.
Quick Ratio
The quick ratio follows a similar downward trajectory, declining from 4.82 in 2021 to 1.54 in 2023 before moderately improving to 2.04 in 2024. This ratio, which excludes inventory from current assets, confirms a consistent reduction in the company's ability to meet short-term obligations with more liquid assets. The partial rebound in 2024 indicates an attempt to strengthen liquidity but still at a reduced level compared to the earlier periods.
Cash Ratio
The cash ratio shows a more pronounced decrease from 4.02 in 2021 to 0.53 in 2023, reaching the lowest liquidity position among the three ratios. There is a slight increase to 0.7 in 2024, reflecting an increase in cash and cash equivalents relative to current liabilities but still indicating a considerably weaker immediate liquidity position than in 2021 and 2022. This trend points to a reduction in the company's most liquid resources available to cover current liabilities.

Current Ratio

AppLovin Corp., current ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Selected Financial Data (US$ in thousands)
Current assets 2,312,190 1,616,163 1,939,083 3,235,064
Current liabilities 1,057,472 944,122 578,958 640,097
Liquidity Ratio
Current ratio1 2.19 1.71 3.35 5.05
Benchmarks
Current Ratio, Competitors2
Accenture PLC 1.10 1.30 1.23 1.25
Adobe Inc. 1.07 1.34 1.11 1.25
Cadence Design Systems Inc. 2.93 1.24 1.27 1.77
CrowdStrike Holdings Inc. 1.76 1.73 1.83 2.65
Datadog Inc. 2.64 3.17 3.09 3.54
International Business Machines Corp. 1.04 0.96 0.92 0.88
Intuit Inc. 1.29 1.47 1.39 1.94
Microsoft Corp. 1.27 1.77 1.78 2.08
Oracle Corp. 0.72 0.91 1.62 2.30
Palantir Technologies Inc. 5.96 5.55 5.17 4.34
Palo Alto Networks Inc. 0.89 0.78 0.77 0.91
Salesforce Inc. 1.09 1.02 1.05 1.23
ServiceNow Inc. 1.10 1.06 1.11 1.05
Synopsys Inc. 2.44 1.15 1.09 1.16
Workday Inc. 1.97 1.75 1.03 1.12
Current Ratio, Sector
Software & Services 1.20 1.40 1.44 1.69
Current Ratio, Industry
Information Technology 1.24 1.41 1.37 1.55

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).

1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= 2,312,190 ÷ 1,057,472 = 2.19

2 Click competitor name to see calculations.


Current Assets
The current assets have shown a declining trend from 3,235,064 thousand US dollars in 2021 to 1,616,163 thousand US dollars in 2023, representing a significant reduction over two years. However, there is a noticeable recovery in 2024, with current assets increasing to 2,312,190 thousand US dollars.
Current Liabilities
Current liabilities decreased modestly from 640,097 thousand US dollars in 2021 to 578,958 thousand US dollars in 2022. Thereafter, there is a substantial increase to 944,122 thousand US dollars in 2023 and a further rise to 1,057,472 thousand US dollars in 2024, indicating growing short-term obligations.
Current Ratio
The current ratio, which measures the company's ability to meet short-term liabilities with short-term assets, declined markedly from 5.05 in 2021 to 1.71 in 2023. This suggests a weakening liquidity position over these years. Nonetheless, in 2024, the current ratio improved to 2.19, reflecting a partial recovery in liquidity, although it remains below the levels seen in 2021 and 2022.

Quick Ratio

AppLovin Corp., quick ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Selected Financial Data (US$ in thousands)
Cash and cash equivalents 741,411 502,152 1,080,484 1,520,504
Restricted cash equivalents 1,050,000
Accounts receivable, net 1,414,246 953,810 702,814 514,520
Total quick assets 2,155,657 1,455,962 1,783,298 3,085,024
 
Current liabilities 1,057,472 944,122 578,958 640,097
Liquidity Ratio
Quick ratio1 2.04 1.54 3.08 4.82
Benchmarks
Quick Ratio, Competitors2
Accenture PLC 0.98 1.18 1.12 1.14
Adobe Inc. 0.95 1.22 1.00 1.11
Cadence Design Systems Inc. 2.53 1.02 1.02 1.47
CrowdStrike Holdings Inc. 1.60 1.58 1.68 2.50
Datadog Inc. 2.57 3.08 3.01 3.45
International Business Machines Corp. 0.90 0.82 0.76 0.69
Intuit Inc. 0.71 1.25 1.17 1.65
Microsoft Corp. 1.06 1.54 1.57 1.90
Oracle Corp. 0.59 0.74 1.43 2.15
Palantir Technologies Inc. 5.83 5.41 4.92 4.11
Palo Alto Networks Inc. 0.82 0.72 0.75 0.88
Salesforce Inc. 0.96 0.90 0.93 1.11
ServiceNow Inc. 1.02 1.00 1.06 1.01
Synopsys Inc. 1.88 0.85 0.85 0.89
Workday Inc. 1.87 1.66 0.96 1.07
Quick Ratio, Sector
Software & Services 1.02 1.22 1.27 1.53
Quick Ratio, Industry
Information Technology 0.96 1.12 1.09 1.30

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).

1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 2,155,657 ÷ 1,057,472 = 2.04

2 Click competitor name to see calculations.


Total Quick Assets
The total quick assets showed a declining trend from 3,085,024 thousand US dollars at the end of 2021 to 1,455,962 thousand US dollars in 2023. However, in 2024, there was a notable recovery, with quick assets increasing to 2,155,657 thousand US dollars. Despite this partial rebound, the level in 2024 remains below the 2021 figure.
Current Liabilities
Current liabilities decreased from 640,097 thousand US dollars at the end of 2021 to 578,958 thousand US dollars in 2022, indicating an improvement in short-term obligations. However, the trend reversed subsequently, with liabilities rising sharply to 944,122 thousand US dollars in 2023 and further increasing to 1,057,472 thousand US dollars in 2024. This upward movement suggests increasing short-term financial commitments over the period.
Quick Ratio
The quick ratio experienced a significant decline over the four years. Starting at a strong 4.82 in 2021, it fell to 3.08 in 2022 and then sharply declined to 1.54 in 2023. In 2024, the quick ratio showed some improvement to 2.04 but remained well below the initial level. This indicates a deterioration in the company's immediate liquidity position, though with some recovery in the most recent period.

Cash Ratio

AppLovin Corp., cash ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Selected Financial Data (US$ in thousands)
Cash and cash equivalents 741,411 502,152 1,080,484 1,520,504
Restricted cash equivalents 1,050,000
Total cash assets 741,411 502,152 1,080,484 2,570,504
 
Current liabilities 1,057,472 944,122 578,958 640,097
Liquidity Ratio
Cash ratio1 0.70 0.53 1.87 4.02
Benchmarks
Cash Ratio, Competitors2
Accenture PLC 0.26 0.50 0.45 0.52
Adobe Inc. 0.75 0.95 0.75 0.84
Cadence Design Systems Inc. 2.03 0.72 0.66 1.13
CrowdStrike Holdings Inc. 1.29 1.28 1.42 2.22
Datadog Inc. 2.25 2.58 2.48 2.94
International Business Machines Corp. 0.45 0.39 0.28 0.22
Intuit Inc. 0.54 0.97 0.90 1.46
Microsoft Corp. 0.60 1.07 1.10 1.47
Oracle Corp. 0.34 0.44 1.12 1.93
Palantir Technologies Inc. 5.25 4.93 4.48 3.83
Palo Alto Networks Inc. 0.34 0.31 0.44 0.57
Salesforce Inc. 0.53 0.48 0.48 0.67
ServiceNow Inc. 0.69 0.66 0.71 0.67
Synopsys Inc. 1.53 0.53 0.56 0.65
Workday Inc. 1.55 1.32 0.72 0.83
Cash Ratio, Sector
Software & Services 0.59 0.79 0.83 1.12
Cash Ratio, Industry
Information Technology 0.57 0.71 0.67 0.89

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).

1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 741,411 ÷ 1,057,472 = 0.70

2 Click competitor name to see calculations.


Cash Assets Trend
The total cash assets show a significant declining trend from the end of 2021 to 2023, decreasing from approximately $2.57 billion to around $502 million. However, there is a partial recovery in 2024, with cash assets rising to approximately $741 million. Despite this increase, cash assets remain considerably lower than the initial 2021 level.
Current Liabilities Trend
Current liabilities initially decrease slightly from about $640 million in 2021 to $579 million in 2022. Thereafter, the liabilities increase sharply, reaching approximately $944 million in 2023 and further rising to around $1.06 billion by the end of 2024. This reflects a growing short-term obligation on the company's balance sheet over the period, especially noticeable after 2022.
Liquidity Position (Cash Ratio)
The cash ratio, which measures the ability to cover current liabilities with total cash assets, exhibits a marked deterioration over the period. The ratio falls from a very strong 4.02 in 2021, indicating cash assets were more than four times current liabilities, down to a low of 0.53 in 2023. This means that in 2023, cash assets covered only slightly over half of the current liabilities. In 2024, there is a slight improvement to 0.7, but liquidity remains well below the 2021 level, signaling a continued weaker cash position relative to obligations.
Overall Analysis
The data reveals a weakening liquidity profile from 2021 through 2023 as cash reserves decline sharply while current liabilities increase significantly. Although some improvement in cash assets and liquidity is observed in 2024, the company's cash resources are still insufficient to cover its short-term liabilities at a similar capacity as in 2021. This trend could impact the company's short-term financial flexibility and ability to meet immediate obligations without additional financing or asset conversion.