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).
The liquidity position of the organization remained strong between 2018 and 2022, characterized by a substantial buffer of current assets relative to short-term liabilities. While a period of contraction occurred in 2021, the ratios remained well above the standard thresholds for solvency, indicating a low risk of liquidity distress.
- Current Ratio
- The current ratio exhibited fluctuations over the five-year period, peaking at 3.83 in 2020 before declining to a period low of 2.65 in 2021. By the end of 2022, the ratio recovered to 3.00. This suggests that the company consistently maintained at least three times the assets necessary to cover its current obligations, though the volatility in 2021 indicates a temporary shift in the composition of current assets or an increase in short-term liabilities.
- Quick Ratio
- The quick ratio followed a trajectory similar to the current ratio, moving from 2.89 in 2018 to a peak of 3.09 in 2020, followed by a significant drop to 1.83 in 2021 and a subsequent rise to 2.21 in 2022. The narrow gap between the current and quick ratios suggests that inventory levels do not represent a disproportionate share of current assets, meaning the company does not rely heavily on inventory liquidation to meet immediate debts.
- Cash Ratio
- The cash ratio showed the most pronounced volatility, starting at 2.11 in 2018 and reaching 2.19 in 2020, before falling sharply to 1.06 in 2021 and recovering to 1.62 in 2022. Despite the decline in 2021, the ratio remained above 1.0 throughout the entire period, demonstrating that the company held enough cash and cash equivalents to settle all current liabilities immediately without relying on the sale of any other assets.
Overall, the synchronized dip across all three liquidity metrics in 2021 suggests a period of increased capital expenditure or a strategic reallocation of liquid assets. However, the recovery observed in 2022 confirms a return toward a more conservative liquidity posture.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
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 | — | — | — | |
| Caterpillar Inc. | 1.39 | 1.46 | — | — | — | |
| Eaton Corp. plc | 1.38 | 1.04 | — | — | — | |
| GE Aerospace | 1.16 | 1.28 | — | — | — | |
| Honeywell International Inc. | 1.25 | 1.30 | — | — | — | |
| Lockheed Martin Corp. | 1.32 | 1.42 | — | — | — | |
| RTX Corp. | 1.09 | 1.19 | — | — | — | |
| Current Ratio, Sector | ||||||
| Capital Goods | 1.22 | 1.31 | — | — | — | |
| Current Ratio, Industry | ||||||
| Industrials | 1.20 | 1.29 | — | — | — | |
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.
The analysis of the short-term liquidity position indicates a strong and stable capacity to meet immediate financial obligations. Current assets have expanded significantly over the five-year period, growing from 558,155 thousand USD in 2018 to 1,805,278 thousand USD by the end of 2022. This consistent upward trajectory suggests a substantial accumulation of liquid resources.
- Growth of Short-Term Obligations
- Current liabilities have also experienced a steady increase, rising from 166,011 thousand USD in 2018 to 602,646 thousand USD in 2022. While the total amount of short-term debt has grown, the pace of growth has been managed relative to the expansion of the asset base.
- Current Ratio Fluctuations
- The current ratio has remained well above the baseline of 1.0, signaling a robust liquidity cushion. The ratio peaked in 2020 at 3.83 before experiencing a decline to 2.65 in 2021. However, a recovery is observed in 2022, with the ratio returning to 3.00.
- Liquidity Stability Analysis
- Despite the volatility in the current ratio between 2020 and 2022, the values consistently indicate that current assets are approximately three times the magnitude of current liabilities. This suggests a conservative liquidity strategy and a low risk of insolvency regarding short-term commitments.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
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 | — | — | — | |
| Caterpillar Inc. | 0.79 | 0.89 | — | — | — | |
| Eaton Corp. plc | 0.73 | 0.54 | — | — | — | |
| GE Aerospace | 0.81 | 0.93 | — | — | — | |
| Honeywell International Inc. | 0.88 | 0.94 | — | — | — | |
| Lockheed Martin Corp. | 1.09 | 1.15 | — | — | — | |
| RTX Corp. | 0.69 | 0.81 | — | — | — | |
| Quick Ratio, Sector | ||||||
| Capital Goods | 0.64 | 0.71 | — | — | — | |
| Quick Ratio, Industry | ||||||
| Industrials | 0.71 | 0.80 | — | — | — | |
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.
The liquidity position from 2018 to 2022 is characterized by a substantial increase in both liquid assets and short-term obligations. The quick ratio remained consistently above 1.0 throughout the period, indicating a sustained capacity to meet immediate financial commitments without relying on the sale of inventory.
- Total Quick Assets Growth
- A strong upward trajectory is observed in total quick assets, which rose from 480,041 thousand USD in 2018 to 1,332,883 thousand USD by 2022. The most significant expansion occurred between 2021 and 2022, where assets increased by approximately 74%.
- Current Liabilities Escalation
- Current liabilities exhibited consistent year-over-year growth, increasing from 166,011 thousand USD in 2018 to 602,646 thousand USD in 2022. This represents a steady accumulation of short-term obligations over the five-year window.
- Quick Ratio Fluctuations
- The quick ratio demonstrated volatility, peaking at 3.09 in 2020 before dropping to a period low of 1.83 in 2021. This decline was driven by current liabilities growing at a faster rate than quick assets during that specific interval. A partial recovery to 2.21 was observed in 2022, supported by the sharp increase in liquid assets.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
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 | — | — | — | |
| Caterpillar Inc. | 0.22 | 0.31 | — | — | — | |
| Eaton Corp. plc | 0.09 | 0.08 | — | — | — | |
| GE Aerospace | 0.44 | 0.54 | — | — | — | |
| Honeywell International Inc. | 0.51 | 0.59 | — | — | — | |
| Lockheed Martin Corp. | 0.16 | 0.26 | — | — | — | |
| RTX Corp. | 0.16 | 0.22 | — | — | — | |
| Cash Ratio, Sector | ||||||
| Capital Goods | 0.26 | 0.32 | — | — | — | |
| Cash Ratio, Industry | ||||||
| Industrials | 0.32 | 0.39 | — | — | — | |
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.
Between 2018 and 2022, the liquidity position was characterized by a significant expansion in both liquid assets and short-term obligations, with the cash ratio remaining above 1.0 throughout the period. This indicates a consistent ability to meet all current liabilities using only cash and cash equivalents, though the margin of safety fluctuated considerably.
- Cash Asset Growth
- Total cash assets demonstrated a strong upward trajectory, increasing from 349.46 million US dollars in 2018 to 974.69 million US dollars by the end of 2022. The most substantial growth occurred between 2021 and 2022, where cash holdings more than doubled, signifying a period of aggressive liquidity accumulation.
- Current Liability Trends
- A consistent and accelerating increase in current liabilities is observed, rising from 166.01 million US dollars in 2018 to 602.65 million US dollars in 2022. The growth in liabilities reflects an expanding operational scale or increased short-term financing requirements over the five-year window.
- Cash Ratio Volatility
- The cash ratio exhibited notable volatility, starting at 2.11 in 2018 and peaking at 2.19 in 2020. A sharp decline was recorded in 2021, with the ratio falling to 1.06, the lowest point in the analyzed period. This decline was the result of a simultaneous decrease in total cash assets and a substantial increase in current liabilities. A recovery followed in 2022, as the ratio rose to 1.62, driven by the surge in cash assets.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?