Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Enphase Energy Inc., liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Current ratio | 4.59 | 3.55 | 3.33 | 1.75 | 2.51 | |
| Quick ratio | 4.02 | 3.22 | 3.07 | 1.61 | 2.22 | |
| Cash ratio | 3.18 | 2.53 | 2.31 | 1.27 | 1.49 |
Based on: 10-K (reporting date: 2023-12-31), 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).
The analysis of liquidity ratios from 2019 to 2023 reveals a significant strengthening of the company's short-term financial position. After a brief decline in liquidity metrics in 2020, there has been a consistent and substantial upward trend across all measured ratios, indicating an increasing capacity to cover short-term obligations.
- Current Ratio
- The current ratio experienced a contraction from 2.51 in 2019 to 1.75 in 2020, before entering a period of sustained growth. By December 31, 2023, the ratio reached 4.59, suggesting that current assets exceed current liabilities by more than fourfold, representing a highly conservative liquidity cushion.
- Quick Ratio
- Following a similar trajectory to the current ratio, the quick ratio declined to 1.61 in 2020 and subsequently rose to 4.02 by the end of 2023. The minimal variance between the current and quick ratios indicates that inventory levels do not constitute a primary component of current assets, implying high asset quality and immediate availability.
- Cash Ratio
- The cash ratio demonstrated a steady increase from 1.27 in 2020 to 3.18 in 2023. A cash ratio consistently above 1.0 signifies that the company possesses enough cash and cash equivalents to settle all current liabilities immediately without relying on the sale of inventory or the collection of receivables.
The convergence of these trends suggests a strategic accumulation of liquid assets over the last three fiscal years. The significant margin by which all three ratios exceed the 1.0 threshold indicates an exceptionally low risk of liquidity distress and provides substantial financial flexibility for operational scaling or strategic investments.
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Current Ratio
Enphase Energy Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 2,443,518) | 2,264,271) | 1,462,461) | 933,064) | 499,657) | |
| Current liabilities | 532,449) | 638,219) | 439,796) | 534,043) | 199,311) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 4.59 | 3.55 | 3.33 | 1.75 | 2.51 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 2.51 | 2.36 | 2.02 | — | — | |
| Analog Devices Inc. | 1.37 | 2.02 | 1.94 | 1.84 | — | |
| Applied Materials Inc. | 2.60 | 2.16 | 2.54 | 3.00 | — | |
| Broadcom Inc. | 2.82 | 2.62 | 2.64 | 1.87 | — | |
| Intel Corp. | 1.54 | 1.57 | 2.10 | — | — | |
| KLA Corp. | 2.24 | 2.50 | 2.71 | — | — | |
| Lam Research Corp. | 3.16 | 2.69 | 3.30 | — | — | |
| Marvell Technology Inc. | 1.37 | 1.80 | 1.50 | — | — | |
| Micron Technology Inc. | 4.46 | 2.89 | 3.10 | — | — | |
| NVIDIA Corp. | 3.52 | 6.65 | 4.09 | — | — | |
| Qualcomm Inc. | 2.33 | 1.75 | 1.68 | 2.14 | — | |
| Texas Instruments Inc. | 4.55 | 4.70 | 5.33 | — | — | |
| Current Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 2.42 | 2.33 | 2.45 | — | — | |
| Current Ratio, Industry | ||||||
| Information Technology | 1.41 | 1.37 | 1.55 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= 2,443,518 ÷ 532,449 = 4.59
2 Click competitor name to see calculations.
An evaluation of the short-term liquidity position reveals a significant strengthening of the current ratio over the five-year period from 2019 to 2023. While there was a temporary contraction in 2020, the subsequent trajectory demonstrates a substantial increase in the capacity to meet short-term obligations.
- Current Asset Trajectory
- Current assets exhibited consistent and aggressive growth, rising from $499.7 million in 2019 to $2.44 billion by the end of 2023. This represents a near fivefold increase in liquid resources, reflecting a significant expansion of the asset base over the analyzed period.
- Current Liability Dynamics
- Current liabilities showed more volatility compared to the steady growth of assets. After a sharp increase in 2020 to $534 million, the figures fluctuated, peaking at $638.2 million in 2022 before declining to $532.4 million in 2023. The growth rate of liabilities has remained modest relative to the expansion of assets.
- Current Ratio Interpretation
- The current ratio declined from 2.51 to 1.75 in 2020, coinciding with a rapid increase in current liabilities. However, a strong recovery followed, with the ratio climbing to 3.33 in 2021, 3.55 in 2022, and reaching a peak of 4.59 in 2023. This trend indicates a highly liquid financial position, with current assets covering current liabilities more than four times over by the end of the period.
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Quick Ratio
Enphase Energy Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 288,748) | 473,244) | 119,316) | 679,379) | 251,409) | |
| Restricted cash | —) | —) | —) | —) | 44,700) | |
| Marketable securities | 1,406,286) | 1,139,599) | 897,335) | —) | —) | |
| Accounts receivable, net of allowances | 445,959) | 440,896) | 333,626) | 182,165) | 145,413) | |
| Total quick assets | 2,140,993) | 2,053,739) | 1,350,277) | 861,544) | 441,522) | |
| Current liabilities | 532,449) | 638,219) | 439,796) | 534,043) | 199,311) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 4.02 | 3.22 | 3.07 | 1.61 | 2.22 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 1.51 | 1.57 | 1.49 | — | — | |
| Analog Devices Inc. | 0.76 | 1.34 | 1.24 | 1.31 | — | |
| Applied Materials Inc. | 1.63 | 1.17 | 1.64 | 1.95 | — | |
| Broadcom Inc. | 2.34 | 2.18 | 2.27 | 1.56 | — | |
| Intel Corp. | 1.01 | 1.01 | 1.38 | — | — | |
| KLA Corp. | 1.33 | 1.57 | 1.81 | — | — | |
| Lam Research Corp. | 1.95 | 1.72 | 2.11 | — | — | |
| Marvell Technology Inc. | 0.88 | 1.20 | 1.19 | — | — | |
| Micron Technology Inc. | 2.53 | 1.92 | 2.17 | — | — | |
| NVIDIA Corp. | 2.61 | 5.96 | 3.56 | — | — | |
| Qualcomm Inc. | 1.51 | 1.01 | 1.34 | 1.75 | — | |
| Texas Instruments Inc. | 3.12 | 3.67 | 4.45 | — | — | |
| Quick Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 1.60 | 1.62 | 1.78 | — | — | |
| Quick Ratio, Industry | ||||||
| Information Technology | 1.12 | 1.09 | 1.30 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 2,140,993 ÷ 532,449 = 4.02
2 Click competitor name to see calculations.
The liquidity position of the entity has strengthened significantly over the five-year period ending December 31, 2023. A general upward trajectory in the quick ratio is observed, indicating an increasing capacity to cover short-term obligations using only the most liquid assets.
- Total Quick Assets Trend
- A consistent and substantial increase in total quick assets is evident, rising from 441,522 thousand US$ in 2019 to 2,140,993 thousand US$ by 2023. This growth represents a nearly fivefold increase in highly liquid resources over the analyzed period, providing a robust buffer for operational requirements.
- Current Liabilities Behavior
- Current liabilities have exhibited volatility compared to the steady growth of assets. After a sharp increase between 2019 and 2020, liabilities fluctuated, peaking at 638,219 thousand US$ in 2022 before declining to 532,449 thousand US$ in 2023. This suggests a non-linear approach to managing short-term debt and obligations.
- Quick Ratio Interpretation
- The quick ratio experienced a temporary decline in 2020, dropping to 1.61 as liabilities grew faster than quick assets. However, a strong recovery followed, with the ratio climbing to 3.07 in 2021 and continuing to rise to 4.02 by 2023. The final ratio indicates that the entity holds more than four times the liquid assets required to settle its current liabilities, suggesting an exceptionally high level of short-term solvency and minimal reliance on inventory liquidation to meet immediate financial commitments.
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Cash Ratio
Enphase Energy Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 288,748) | 473,244) | 119,316) | 679,379) | 251,409) | |
| Restricted cash | —) | —) | —) | —) | 44,700) | |
| Marketable securities | 1,406,286) | 1,139,599) | 897,335) | —) | —) | |
| Total cash assets | 1,695,034) | 1,612,843) | 1,016,651) | 679,379) | 296,109) | |
| Current liabilities | 532,449) | 638,219) | 439,796) | 534,043) | 199,311) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 3.18 | 2.53 | 2.31 | 1.27 | 1.49 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 0.86 | 0.92 | 0.85 | — | — | |
| Analog Devices Inc. | 0.30 | 0.60 | 0.71 | 0.77 | — | |
| Applied Materials Inc. | 0.93 | 0.35 | 0.86 | 1.29 | — | |
| Broadcom Inc. | 1.92 | 1.76 | 1.94 | 1.20 | — | |
| Intel Corp. | 0.89 | 0.88 | 1.03 | — | — | |
| KLA Corp. | 0.87 | 0.94 | 1.19 | — | — | |
| Lam Research Corp. | 1.28 | 0.77 | 1.25 | — | — | |
| Marvell Technology Inc. | 0.38 | 0.44 | 0.69 | — | — | |
| Micron Technology Inc. | 2.01 | 1.24 | 1.34 | — | — | |
| NVIDIA Corp. | 2.03 | 4.89 | 2.95 | — | — | |
| Qualcomm Inc. | 1.18 | 0.54 | 1.04 | 1.29 | — | |
| Texas Instruments Inc. | 2.58 | 3.04 | 3.79 | — | — | |
| Cash Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 1.20 | 1.14 | 1.29 | — | — | |
| Cash Ratio, Industry | ||||||
| Information Technology | 0.71 | 0.67 | 0.89 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 1,695,034 ÷ 532,449 = 3.18
2 Click competitor name to see calculations.
The analysis of the company's liquidity position from 2019 to 2023 reveals a significant and consistent strengthening of the cash ratio, indicating an enhanced capacity to meet short-term obligations using only its most liquid assets.
- Total Cash Assets Trend
- A sustained upward trajectory in total cash assets is observed over the five-year period. Assets increased from 296,109 thousand US dollars in 2019 to 1,695,034 thousand US dollars by December 31, 2023. This represents a substantial accumulation of liquidity, with the most significant growth occurring between 2020 and 2022.
- Current Liabilities Dynamics
- Current liabilities exhibited a more volatile pattern compared to cash assets. After a sharp increase in 2020, liabilities fluctuated, peaking at 638,219 thousand US dollars in 2022 before declining to 532,449 thousand US dollars in 2023. The reduction in liabilities in the final year, paired with continuing cash growth, contributed to a stronger liquidity profile.
- Cash Ratio Evolution
- The cash ratio began at 1.49 in 2019 and experienced a slight contraction to 1.27 in 2020. However, from 2021 onward, a rapid expansion is evident, with the ratio rising to 2.31, 2.53, and eventually 3.18 in 2023. This progression indicates that by the end of the period, the company held more than three times the amount of cash required to cover its immediate liabilities.
- Liquidity Assessment
- The widening gap between total cash assets and current liabilities suggests a conservative liquidity strategy. The shift from a ratio of 1.49 to 3.18 demonstrates a transition toward an extremely high level of short-term solvency, reducing financial risk and providing significant capital flexibility for operational or strategic needs.
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