DexCom Inc. (NASDAQ:DXCM)

Current Ratio

The current ratio demonstrates a decreasing trend over the five-year period, starting from a notably high value of 7.64 in 2018 and declining steadily to 1.99 by the end of 2022. This suggests a reduction in the company’s short-term liquidity and a lower buffer to cover current liabilities with current assets.

Quick Ratio

The quick ratio follows a similar downward trajectory, moving from 7.25 in 2018 to 1.72 in 2022. This decline indicates a diminishing ability to meet short-term obligations without relying on the sale of inventory, reflecting a tightening in more liquid asset coverage.

Cash Ratio

The cash ratio exhibits a consistent decline across the analyzed period, starting at 6.23 in 2018 and falling to 1.34 by the end of 2022. This trend points to a diminution of cash and cash equivalents relative to current liabilities, implying less immediate liquidity available to the company.

Overall Analysis

All three liquidity ratios show a marked decreasing pattern over the five years, indicating a contraction in the company’s liquidity position. The decline, particularly in the most recent year, is pronounced and may warrant further investigation into working capital management and the company’s strategy for maintaining sufficient liquid assets to cover short-term liabilities.

Current Assets

Current assets exhibited a strong upward trend from 2018 to 2020, increasing from approximately 1.7 billion USD to over 3.4 billion USD. Growth continued but at a slower pace in 2021, reaching roughly 3.68 billion USD, before slightly declining to around 3.67 billion USD in 2022.

Current Liabilities

Current liabilities showed consistent growth from 2018 through 2021, rising from about 0.22 billion USD to approximately 0.72 billion USD. However, there was a sharp increase in liabilities in 2022, more than doubling to nearly 1.84 billion USD.

Current Ratio

The current ratio, an indicator of short-term liquidity, decreased significantly over the period. Starting very high at 7.64 in 2018, it declined steadily through 2021, remaining above 5.0 until it dropped to 1.99 in 2022. This decline reflects the disproportionate rise in current liabilities relative to current assets in the most recent year, suggesting reduced liquidity and potentially greater short-term financial pressure.

Overall Analysis

The data indicates that while current assets grew substantially between 2018 and 2021, the rapid escalation of current liabilities in 2022 has eroded liquidity significantly. The marked reduction of the current ratio to below 2.0 in 2022 signals a shift towards tighter short-term financial conditions, warranting close attention to working capital management going forward.

The financial data reveals notable trends in the company's liquidity and short-term financial obligations over the five-year period ending December 31, 2022.

Total Quick Assets

Total quick assets increased consistently from 1,612,300 thousand US dollars in 2018 to a peak of 3,245,500 thousand US dollars in 2021, before slightly declining to 3,169,500 thousand US dollars in 2022. This upward trend reflects a strengthening in the company's highly liquid asset base over most of the period.

Current Liabilities

Current liabilities rose sharply throughout the timeframe, beginning at 222,400 thousand US dollars in 2018 and reaching a significantly higher level of 1,839,300 thousand US dollars by the end of 2022. Notably, the increase accelerated after 2020, with liabilities more than doubling from 720,800 thousand US dollars in 2021 to 1,839,300 thousand US dollars in 2022. This suggests a growing short-term debt or obligations burden on the company.

Quick Ratio

The quick ratio, a measure of liquidity indicating the company's ability to cover current liabilities with quick assets, displayed a downward trend across the period. It decreased from a very strong 7.25 in 2018 to 1.72 in 2022. The ratio remained relatively stable between 5.05 and 5.11 during 2019 and 2020 but declined gradually thereafter, dropping significantly in 2022. The reduction in this ratio is primarily driven by the faster growth of current liabilities relative to quick assets, signaling a weakening liquidity position by the end of the period.

In summary, while the company's quick assets increased over the years indicating growth in liquid resources, the sharp increase in current liabilities outpaced this growth, leading to a marked decline in the quick ratio. This trend points to a reduced short-term financial flexibility and potential concerns regarding the company’s ability to meet its immediate obligations without external financing or asset sales as of the latest reported period.

Total cash assets

The total cash assets demonstrated a significant upward trend from 2018 through 2021, increasing from approximately 1.39 billion US dollars to about 2.73 billion US dollars. However, in 2022, the total cash assets decreased to around 2.46 billion US dollars, marking a decline compared to the previous year but remaining substantially higher than in 2018 and 2019.

Current liabilities

Current liabilities increased consistently over the period, starting at 222.4 million US dollars in 2018 and rising sharply to nearly 1.84 billion US dollars by the end of 2022. The most pronounced increase occurred between 2021 and 2022, where current liabilities more than doubled from approximately 721 million US dollars to over 1.83 billion US dollars.

Cash ratio

The cash ratio, which measures liquidity by comparing cash assets to current liabilities, exhibited a declining trend throughout the period. The ratio decreased from 6.23 in 2018 to 1.34 in 2022. This indicates a substantial reduction in liquidity relative to current liabilities, with the ratio showing the steepest decline between 2021 and 2022. Despite the reduction, the ratio remained above 1 until 2022, suggesting the company generally had more cash assets than current liabilities except in the final reported year.