Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Etsy Inc., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
- Current Ratio
- The current ratio demonstrates a general declining trend over the observed periods. Starting from a high of 6.62 in March 2018, it fluctuates but shows a consistent downward movement, reaching as low as 2.18 by December 2021. Although there is a slight improvement in early 2022, the ratio remains substantially lower than in earlier years, settling around 2.72 by September 2022. This downward trend indicates a reduction in liquidity relative to current liabilities, suggesting the company may have become less capable of covering short-term obligations using current assets over time.
- Quick Ratio
- The quick ratio follows a similar trajectory to the current ratio, declining markedly from 5.94 in March 2018 to a low of 1.64 by June 2022. The initial periods show fluctuations but a general decrease, with a notable dip around 2021 into 2022. The ratio stabilizes somewhat at just above 2.0 towards September 2022. This decline signifies a decreasing ability to cover short-term liabilities using only the most liquid assets, excluding inventory, pointing to a tightening liquidity position over the years.
- Cash Ratio
- The cash ratio also exhibits a declining pattern consistent with the other liquidity measures. Beginning at 5.64 in March 2018, it experiences periodic decreases and some recoveries but ultimately falls to approximately 2.09 by September 2022. The ratio reached its lowest point around mid-2022 at 1.6. This indicates a reduction in the availability of immediate cash and cash equivalents to meet current obligations, reflecting potentially more constrained cash reserves relative to liabilities compared to the earlier periods.
- Summary of Liquidity Trends
- Across all three liquidity ratios, there is a clear downward trend over the five-year period. Although the company maintained strong liquidity levels in the early years, there has been a significant decline starting around 2020, which could suggest strategic changes in asset management or shifting operational requirements. Despite this reduction, the ratios remain above 1.0, indicating that the company still holds sufficient liquid assets to meet short-term liabilities, albeit with less margin than before. The trends imply increased financial prudence or possible shifts in working capital structure.
Current Ratio
Etsy Inc., current ratio calculation (quarterly data)
| Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Current assets | 1,352,113) | 1,320,222) | 1,295,137) | 1,341,501) | 1,077,334) | 2,690,980) | 1,893,619) | 1,894,781) | 1,697,831) | 1,194,335) | 906,952) | 921,038) | 945,840) | 743,653) | 724,001) | 680,289) | 707,949) | 666,233) | 704,997) | ||||||
| Current liabilities | 497,246) | 449,902) | 483,205) | 615,588) | 471,007) | 407,000) | 427,045) | 454,664) | 340,942) | 279,579) | 158,849) | 188,528) | 154,707) | 166,510) | 148,675) | 112,062) | 128,931) | 113,499) | 106,556) | ||||||
| Liquidity Ratio | |||||||||||||||||||||||||
| Current ratio1 | 2.72 | 2.93 | 2.68 | 2.18 | 2.29 | 6.61 | 4.43 | 4.17 | 4.98 | 4.27 | 5.71 | 4.89 | 6.11 | 4.47 | 4.87 | 6.07 | 5.49 | 5.87 | 6.62 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Current Ratio, Competitors2 | |||||||||||||||||||||||||
| Amazon.com Inc. | 0.94 | 0.95 | 0.96 | 1.14 | 1.12 | 1.20 | 1.05 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Home Depot Inc. | 1.13 | 1.06 | 1.10 | 1.23 | 1.36 | 1.30 | 1.17 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lowe’s Cos. Inc. | 1.19 | 1.16 | 1.17 | 1.19 | 1.38 | 1.30 | 1.20 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| TJX Cos. Inc. | 1.29 | 1.33 | 1.52 | 1.46 | 1.41 | 1.51 | 2.20 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Current ratio = Current assets ÷ Current liabilities
= 1,352,113 ÷ 497,246 = 2.72
2 Click competitor name to see calculations.
- Current Assets
- Over the examined period, current assets exhibit significant fluctuations with an overall increasing trend from early 2018 through mid-2021, reaching a peak around June 2021. Initial values around 700 million US dollars rose gradually with notable acceleration starting in 2020, where current assets surged from approximately 900 million to almost 2.7 billion by mid-2021. Thereafter, current assets declined sharply in late 2021 and early 2022, stabilizing around 1.3 billion US dollars by September 2022.
- Current Liabilities
- Current liabilities demonstrate a steady upward trajectory throughout the period, increasing from approximately 107 million US dollars in early 2018 to nearly 615 million by mid-2021. Following this peak, liabilities showed some decrease towards late 2021 but then fluctuated within a range between 450 million and 500 million in 2022.
- Current Ratio
- The current ratio reflects the relationship between current assets and current liabilities, indicating liquidity strength. Initially, the ratio was very strong, exceeding 6.0 in early 2018, followed by a general decline, dipping below 5.0 by mid-2019 but maintaining values above 4.0 through early 2020. A notable decrease occurred in 2021, dropping to approximately 2.29 by March 2022, indicating reduced liquidity relative to earlier years. Despite fluctuations, the ratio remained above 2.0 through the end of the period, signifying a continued but weakened capacity to cover short-term obligations.
- Summary Insights
- The data suggests a substantial growth in the company's short-term assets up to mid-2021, likely reflecting increased operational scale or accumulation of liquid resources. Concurrently, current liabilities rose significantly, implying higher short-term obligations. The resulting decline in the current ratio points to accelerated liabilities growth outpacing asset growth, thus moderately compressing liquidity buffers. Although liquidity remains adequate, the downward trend in the current ratio highlights a potential area for monitoring to ensure sustained short-term financial stability.
Quick Ratio
Etsy Inc., quick ratio calculation (quarterly data)
| Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Cash and cash equivalents | 789,990) | 758,874) | 756,237) | 780,196) | 619,402) | 2,053,882) | 1,163,678) | 1,244,099) | 1,144,974) | 677,524) | 442,354) | 443,293) | 671,769) | 359,159) | 345,674) | 366,985) | 362,727) | 357,820) | 533,855) | ||||||
| Short-term investments | 251,165) | 247,816) | 225,983) | 204,416) | 197,430) | 430,727) | 502,569) | 425,119) | 379,586) | 365,659) | 361,640) | 373,959) | 180,170) | 274,673) | 276,432) | 257,302) | 221,409) | 209,689) | 67,526) | ||||||
| Accounts receivable, net of expected credit losses | 21,765) | 20,133) | 20,645) | 27,266) | 23,884) | 20,283) | 22,991) | 22,605) | 16,311) | 16,527) | 11,712) | 15,386) | 12,494) | 10,585) | 10,789) | 12,244) | 36,385) | 30,615) | 31,292) | ||||||
| Total quick assets | 1,062,920) | 1,026,823) | 1,002,865) | 1,011,878) | 840,716) | 2,504,892) | 1,689,238) | 1,691,823) | 1,540,871) | 1,059,710) | 815,706) | 832,638) | 864,433) | 644,417) | 632,895) | 636,531) | 620,521) | 598,124) | 632,673) | ||||||
| Current liabilities | 497,246) | 449,902) | 483,205) | 615,588) | 471,007) | 407,000) | 427,045) | 454,664) | 340,942) | 279,579) | 158,849) | 188,528) | 154,707) | 166,510) | 148,675) | 112,062) | 128,931) | 113,499) | 106,556) | ||||||
| Liquidity Ratio | |||||||||||||||||||||||||
| Quick ratio1 | 2.14 | 2.28 | 2.08 | 1.64 | 1.78 | 6.15 | 3.96 | 3.72 | 4.52 | 3.79 | 5.14 | 4.42 | 5.59 | 3.87 | 4.26 | 5.68 | 4.81 | 5.27 | 5.94 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Quick Ratio, Competitors2 | |||||||||||||||||||||||||
| Amazon.com Inc. | 0.42 | 0.43 | 0.48 | 0.68 | 0.64 | 0.76 | 0.63 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Home Depot Inc. | 0.32 | 0.30 | 0.37 | 0.47 | 0.68 | 0.69 | 0.48 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lowe’s Cos. Inc. | 0.32 | 0.29 | 0.31 | 0.28 | 0.52 | 0.60 | 0.34 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| TJX Cos. Inc. | 0.65 | 0.77 | 0.95 | 1.01 | 0.93 | 0.92 | 0.96 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 1,062,920 ÷ 497,246 = 2.14
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends and fluctuations in liquidity metrics over the observed period.
- Total Quick Assets
- Total quick assets demonstrated variability with an overall upward trend from early 2018 through the end of 2021, peaking notably in the third quarter of 2021. Starting at approximately 633 million US dollars at the end of March 2018, quick assets increased to exceed 2.5 billion US dollars by mid-2021, indicating a considerable accumulation of liquid resources during this time frame. However, a sharp decline followed this peak, with values dropping substantially by the end of 2021 and remaining around the 1 billion US dollar level in 2022, implying a significant change in asset liquidity or composition.
- Current Liabilities
- Current liabilities experienced a general upward trend across the observed quarters, rising from roughly 107 million at the start of 2018 to over 615 million in mid-2021. This increase suggests growing short-term obligations. Following this peak, there was a noticeable decrease toward the end of 2021 and into 2022, with liabilities falling to around 480-500 million, highlighting a partial reduction in short-term debt or payables during this later period.
- Quick Ratio
- The quick ratio, a key indicator of short-term liquidity, displayed considerable volatility. Early in the period, ratios were generally high, indicating strong liquidity relative to current liabilities, with values often above 4.0 and reaching as high as 6.15 in mid-2021. Notably, a sharp decline in the quick ratio occurred in the final quarters of 2021, dropping to below 2.0, indicating a weakening in the company’s ability to cover short-term liabilities with its most liquid assets. The ratio stabilized somewhat in 2022 but remained at a lower level around 2.1, suggesting a more conservative liquidity position compared to earlier years.
In summary, the liquidity position improved significantly through 2021, driven by a rise in quick assets despite increasing liabilities. However, a marked correction occurred late 2021, with both quick assets and the quick ratio declining sharply, while current liabilities decreased but not proportionally enough to prevent the liquidity ratio from falling. The data indicates a period of robust liquidity followed by a contraction, highlighting shifting financial dynamics that may warrant further investigation into operational or strategic changes impacting asset liquidity and short-term obligations.
Cash Ratio
Etsy Inc., cash ratio calculation (quarterly data)
| Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Cash and cash equivalents | 789,990) | 758,874) | 756,237) | 780,196) | 619,402) | 2,053,882) | 1,163,678) | 1,244,099) | 1,144,974) | 677,524) | 442,354) | 443,293) | 671,769) | 359,159) | 345,674) | 366,985) | 362,727) | 357,820) | 533,855) | ||||||
| Short-term investments | 251,165) | 247,816) | 225,983) | 204,416) | 197,430) | 430,727) | 502,569) | 425,119) | 379,586) | 365,659) | 361,640) | 373,959) | 180,170) | 274,673) | 276,432) | 257,302) | 221,409) | 209,689) | 67,526) | ||||||
| Total cash assets | 1,041,155) | 1,006,690) | 982,220) | 984,612) | 816,832) | 2,484,609) | 1,666,247) | 1,669,218) | 1,524,560) | 1,043,183) | 803,994) | 817,252) | 851,939) | 633,832) | 622,106) | 624,287) | 584,136) | 567,509) | 601,381) | ||||||
| Current liabilities | 497,246) | 449,902) | 483,205) | 615,588) | 471,007) | 407,000) | 427,045) | 454,664) | 340,942) | 279,579) | 158,849) | 188,528) | 154,707) | 166,510) | 148,675) | 112,062) | 128,931) | 113,499) | 106,556) | ||||||
| Liquidity Ratio | |||||||||||||||||||||||||
| Cash ratio1 | 2.09 | 2.24 | 2.03 | 1.60 | 1.73 | 6.10 | 3.90 | 3.67 | 4.47 | 3.73 | 5.06 | 4.33 | 5.51 | 3.81 | 4.18 | 5.57 | 4.53 | 5.00 | 5.64 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Cash Ratio, Competitors2 | |||||||||||||||||||||||||
| Amazon.com Inc. | 0.42 | 0.43 | 0.48 | 0.68 | 0.64 | 0.76 | 0.63 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Home Depot Inc. | 0.19 | 0.17 | 0.24 | 0.34 | 0.58 | 0.58 | 0.37 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lowe’s Cos. Inc. | 0.32 | 0.29 | 0.31 | 0.28 | 0.52 | 0.60 | 0.34 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| TJX Cos. Inc. | 0.60 | 0.71 | 0.89 | 0.97 | 0.90 | 0.87 | 0.92 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 1,041,155 ÷ 497,246 = 2.09
2 Click competitor name to see calculations.
- Cash Assets
- The total cash assets show fluctuation over the analyzed periods, beginning at approximately $601 million and demonstrating moderate variation through 2018 and 2019. A notable increase occurred in 2020, peaking at over $1.66 billion in December 2020, before a decline in late 2021. The cash holdings stabilized somewhat in 2022, remaining around $1 billion by September.
- Current Liabilities
- Current liabilities generally exhibit an upward trend throughout the periods. Starting near $107 million in March 2018, liabilities increased steadily, reaching a high point of over $615 million in June 2021. Although there is some reduction and fluctuation in late 2021 and into 2022, the levels remain significantly higher than the earlier years, indicating rising short-term obligations.
- Cash Ratio
- The cash ratio, representing liquidity, displays a decreasing trend over the entire period. Initially, liquidity was strong, with ratios above 4.5 in most quarters of 2018 and early 2019, peaking at 6.1 in June 2021. However, there is a sharp drop observed in the second half of 2021, falling as low as 1.6. The ratio somewhat recovers during 2022 but remains considerably lower than in previous years, suggesting reduced liquidity relative to current liabilities.
- Overall Analysis
- The financial data indicates that while cash assets increased substantially during 2020, current liabilities grew at a faster pace in subsequent periods, leading to a decline in liquidity as measured by the cash ratio. This could point to a strategy of leveraging short-term obligations or increased operational expenditures. The decreasing cash ratio, especially the decline after mid-2021, signals a potential risk in meeting short-term liabilities purely with cash and cash equivalents, warranting further attention to working capital management.