Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Axon Enterprise Inc., liquidity ratios
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Current ratio | 3.00 | 2.65 | 3.83 | 3.17 | 3.36 | |
| Quick ratio | 2.21 | 1.83 | 3.09 | 2.54 | 2.89 | |
| Cash ratio | 1.62 | 1.06 | 2.19 | 1.79 | 2.11 |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Current Ratio
- The current ratio exhibited fluctuations over the five-year period. It started at a relatively high level of 3.36 in 2018 and slightly decreased to 3.17 in 2019. The ratio then peaked at 3.83 in 2020, indicating a strong liquidity position that year. However, it dropped significantly to 2.65 in 2021 before improving moderately to 3.00 in 2022. Overall, the trend shows variability but maintains a level above 2, suggesting the company generally maintained a comfortable margin of current assets over current liabilities.
- Quick Ratio
- The quick ratio followed a similar trend to the current ratio, reflecting a slightly more conservative measure of liquidity excluding inventory. It decreased from 2.89 in 2018 to 2.54 in 2019, then increased to its highest point of 3.09 in 2020. A notable decline occurred in 2021, reaching 1.83, the lowest in the reported period, before recovering to 2.21 in 2022. This pattern indicates that liquid assets other than inventory were strongest in 2020 but weakened afterwards, although still staying above 1.
- Cash Ratio
- The cash ratio, the most stringent liquidity measure, also exhibited a downward trend followed by partial recovery. Beginning at 2.11 in 2018, the ratio fell to 1.79 in 2019, rose to 2.19 in 2020, then experienced a sharp decline to 1.06 in 2021, the lowest point recorded. In 2022, it improved to 1.62. Despite fluctuations, the cash ratio remaining above 1 over the years suggests the company consistently maintained sufficient cash or cash equivalents to cover current liabilities, although with some tightening in 2021.
Current Ratio
Axon Enterprise Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 1,805,278) | 1,109,490) | 981,952) | 619,091) | 558,155) | |
| Current liabilities | 602,646) | 418,521) | 256,331) | 195,566) | 166,011) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 3.00 | 2.65 | 3.83 | 3.17 | 3.36 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Boeing Co. | 1.22 | 1.33 | 1.39 | — | — | |
| Caterpillar Inc. | 1.39 | 1.46 | 1.53 | — | — | |
| Eaton Corp. plc | 1.38 | 1.04 | 1.56 | — | — | |
| GE Aerospace | 1.16 | 1.28 | 1.58 | — | — | |
| Honeywell International Inc. | 1.25 | 1.30 | 1.47 | — | — | |
| Lockheed Martin Corp. | 1.32 | 1.42 | 1.39 | — | — | |
| RTX Corp. | 1.09 | 1.19 | 1.21 | — | — | |
| Current Ratio, Sector | ||||||
| Capital Goods | 1.22 | 1.31 | 1.43 | — | — | |
| Current Ratio, Industry | ||||||
| Industrials | 1.20 | 1.29 | 1.41 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Current ratio = Current assets ÷ Current liabilities
= 1,805,278 ÷ 602,646 = 3.00
2 Click competitor name to see calculations.
- Current assets
- The current assets of the company exhibited a consistent upward trend over the five-year period. Starting at approximately $558 million at the end of 2018, current assets increased steadily each year, reaching about $1.81 billion by the end of 2022. This represents more than a threefold increase, indicating a significant rise in liquid or short-term assets available to the company.
- Current liabilities
- Current liabilities also rose throughout the period, growing from around $166 million in 2018 to approximately $603 million in 2022. Although there is a clear upward trajectory, the increase in liabilities is less pronounced when compared to the growth in current assets.
- Current ratio
- The current ratio, a liquidity measure that compares current assets to current liabilities, showed some fluctuations but remained generally strong. It began at 3.36 in 2018, dipped slightly to 3.17 in 2019, then peaked at 3.83 in 2020. A notable decline occurred in 2021 to 2.65, followed by a rebound to 3.00 in 2022. Despite the fluctuations, the ratio consistently remained above 2, indicating that the company maintained a comfortable level of short-term liquidity throughout the period.
Quick Ratio
Axon Enterprise Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 353,684) | 356,332) | 155,440) | 172,250) | 349,462) | |
| Marketable securities | 39,240) | 72,180) | —) | —) | —) | |
| Short-term investments | 581,769) | 14,510) | 406,525) | 178,534) | —) | |
| Accounts and notes receivable, net of allowance | 358,190) | 320,819) | 229,201) | 146,878) | 130,579) | |
| Total quick assets | 1,332,883) | 763,841) | 791,166) | 497,662) | 480,041) | |
| Current liabilities | 602,646) | 418,521) | 256,331) | 195,566) | 166,011) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 2.21 | 1.83 | 3.09 | 2.54 | 2.89 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Boeing Co. | 0.32 | 0.34 | 0.41 | — | — | |
| Caterpillar Inc. | 0.79 | 0.89 | 1.02 | — | — | |
| Eaton Corp. plc | 0.73 | 0.54 | 0.68 | — | — | |
| GE Aerospace | 0.81 | 0.93 | 1.27 | — | — | |
| Honeywell International Inc. | 0.88 | 0.94 | 1.15 | — | — | |
| Lockheed Martin Corp. | 1.09 | 1.15 | 1.05 | — | — | |
| RTX Corp. | 0.69 | 0.81 | 0.78 | — | — | |
| Quick Ratio, Sector | ||||||
| Capital Goods | 0.64 | 0.71 | 0.83 | — | — | |
| Quick Ratio, Industry | ||||||
| Industrials | 0.72 | 0.80 | 0.87 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 1,332,883 ÷ 602,646 = 2.21
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets demonstrated an overall upward trend across the five-year period. Starting at 480,041 thousand US dollars in 2018, the value increased steadily each year, reaching a peak of 1,332,883 thousand US dollars in 2022. Notably, there was a substantial increase between 2019 and 2020, as well as from 2021 to 2022, indicating significant growth in highly liquid assets.
- Current liabilities
- Current liabilities increased consistently throughout the period under review. The figures rose from 166,011 thousand US dollars in 2018 to 602,646 thousand US dollars by the end of 2022. The most pronounced increase occurred between 2020 and 2022, with liabilities more than doubling in that span, reflecting a rise in short-term obligations.
- Quick ratio
- The quick ratio fluctuated over the years, displaying variation in the company's near-term liquidity position. It began at 2.89 in 2018 and declined to 2.54 in 2019, followed by an improvement to 3.09 in 2020. However, it then experienced a marked decrease to 1.83 in 2021, suggesting a tightening of immediate liquidity, before recovering moderately to 2.21 in 2022. Despite the fluctuations, the quick ratio remained above the critical benchmark of 1, indicating that quick assets continued to sufficiently cover current liabilities in each year.
- Overall analysis
- The company exhibited growth in quick assets at a rate that generally outpaced the growth in current liabilities, supporting an expansion in liquidity reserves. Nevertheless, the volatile quick ratio points to some instability in how these liquid assets relate to short-term liabilities, particularly the dip observed in 2021. The recovery in 2022 suggests improved cash or near-cash asset management relative to liabilities. This pattern indicates a focus on maintaining a strong liquidity position, albeit with periods of pressure that warrant continued monitoring.
Cash Ratio
Axon Enterprise Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 353,684) | 356,332) | 155,440) | 172,250) | 349,462) | |
| Marketable securities | 39,240) | 72,180) | —) | —) | —) | |
| Short-term investments | 581,769) | 14,510) | 406,525) | 178,534) | —) | |
| Total cash assets | 974,693) | 443,022) | 561,965) | 350,784) | 349,462) | |
| Current liabilities | 602,646) | 418,521) | 256,331) | 195,566) | 166,011) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 1.62 | 1.06 | 2.19 | 1.79 | 2.11 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Boeing Co. | 0.19 | 0.20 | 0.29 | — | — | |
| Caterpillar Inc. | 0.22 | 0.31 | 0.36 | — | — | |
| Eaton Corp. plc | 0.09 | 0.08 | 0.19 | — | — | |
| GE Aerospace | 0.44 | 0.54 | 0.78 | — | — | |
| Honeywell International Inc. | 0.51 | 0.59 | 0.79 | — | — | |
| Lockheed Martin Corp. | 0.16 | 0.26 | 0.23 | — | — | |
| RTX Corp. | 0.16 | 0.22 | 0.25 | — | — | |
| Cash Ratio, Sector | ||||||
| Capital Goods | 0.26 | 0.32 | 0.44 | — | — | |
| Cash Ratio, Industry | ||||||
| Industrials | 0.32 | 0.39 | 0.47 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 974,693 ÷ 602,646 = 1.62
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets demonstrate a general upward trend over the five-year period. Starting at $349.5 million in 2018, there was a slight increase in 2019 to $350.8 million, followed by a significant rise in 2020 to approximately $562.0 million. In 2021, total cash assets decreased to $443.0 million but then substantially increased again in 2022, reaching nearly $974.7 million. This pattern indicates substantial growth in liquidity towards the end of the period, despite some fluctuations.
- Current Liabilities
- Current liabilities exhibited a consistent and significant increase each year. From $166.0 million in 2018, liabilities rose steadily to $195.6 million in 2019 and further to $256.3 million in 2020. The upward trend accelerated in 2021, reaching $418.5 million, and continued to grow sharply in 2022 to $602.6 million. This continuous increase indicates growing short-term obligations, which may reflect expanding operations or financing requirements.
- Cash Ratio
- The cash ratio, which measures liquidity by comparing cash assets to current liabilities, showed variability across the period. It began at a strong position of 2.11 in 2018, indicating more than twice the amount of cash relative to current liabilities. The ratio declined to 1.79 in 2019 but improved to 2.19 in 2020, marking the highest point in liquidity relative to short-term debt. However, 2021 saw a marked decline to 1.06, suggesting liquidity was almost equivalent to current liabilities, indicating tighter short-term financial flexibility. In 2022, the cash ratio improved again to 1.62, reflecting a partial recovery in liquidity, although it remains below earlier peak levels.