Illumina Inc. (NASDAQ:ILMN)

Current Ratio

The current ratio exhibited fluctuations over the analyzed periods. Initially, there was a decreasing trend from 4.31 in early April 2016 to 3.29 by the end of 2016. Subsequently, the ratio showed a recovery and increase, reaching a peak of 6.82 in June 2019. After this peak, the current ratio declined steadily to 2.68 by October 2021. Generally, this indicates variability in the ability to cover current liabilities with current assets, with notable strengthening around mid-2019 followed by a weakening trend toward the latter periods.

Quick Ratio

The quick ratio mirrored the overall pattern observed in the current ratio but at slightly lower magnitudes, reflecting the exclusion of inventory from liquid assets. It started at 3.63 in April 2016, downsized gradually to 2.75 by the end of 2016, then increased sharply to a maximum of 6.00 by December 2019. Post this peak, the ratio declined progressively to 2.04 by October 2021. This pattern suggests an improvement in liquid asset coverage relative to current liabilities during mid-periods, followed by a reduction in more recent quarters.

Cash Ratio

The cash ratio showed a similar trend but generally stayed below the current and quick ratios, reflecting a more conservative measure of liquidity focused solely on cash and cash equivalents. Starting at 2.79 in April 2016, it dipped to around 2.21 by the end of 2016, then climbed significantly to a peak of approximately 5.18 in March 2019. Thereafter, it declined steadily to 1.38 by October 2021. This indicates a notable increase in cash holdings relative to current liabilities in mid-term periods and a declining liquidity position based on cash levels in the most recent quarters.

Overall Insights

The liquidity ratios overall reveal a pattern of enhanced short-term financial strength peaking predominantly between 2018 and 2019, with the highest liquidity levels observed in the second quarter of 2019. Following this period, liquidity measures show a consistent downward trend, suggesting a reduction in liquid asset cushions relative to current obligations. The declines across all three ratios by late 2021 point to a tightening in liquidity conditions, which may warrant further investigation into working capital management and potential impacts on operational flexibility.

The quarterly financial data reveals notable fluctuations in the company's liquidity position as reflected by the current assets, current liabilities, and current ratio over the observed periods.

Current Assets

Current assets demonstrated a generally upward trajectory from April 2016 through July 2021, increasing from approximately 2,074 million USD to a peak of 5,642 million USD. This growth indicates an expansion of liquid and short-term assets available to meet obligations. However, a sharp decline to 2,451 million USD is observed in October 2021, suggesting a significant reduction in liquid resources within that quarter.

Current Liabilities

Current liabilities also increased overall from 481 million USD in April 2016 to a high point of 1,268 million USD in April 2021. Yet, the trend displays volatility with periods of both increases and decreases. The highest spike is noted between July 2017 and December 2018, reaching as high as 1,804 million USD. Following April 2021, liabilities appear to slightly stabilize but remain relatively elevated compared to the earlier years, ending at 914 million USD in October 2021.

Current Ratio

The current ratio, a measure of short-term liquidity, exhibited wide variations. Initially, this ratio started high at 4.31 in April 2016, suggesting strong ability to cover short-term liabilities with current assets. It then declined to a low of 2.46 by September 2018, indicating compression of liquidity. Subsequently, there was a significant increase peaking at 6.82 in June 2019, which could reflect a substantial build-up in current assets or reduction in current liabilities during that timeframe. Following this peak, the ratio declined again, fluctuating between approximately 3.6 and 4.5 through July 2021. A pronounced drop to 2.68 occurs in October 2021, marking the lowest point in the last several years and implying diminished liquidity.

Overall, the data suggest the company experienced an expanding asset base and fluctuating liabilities over the periods reviewed, with liquidity ratios demonstrating periods of strong coverage capacity interspersed with notable contractions. The sharp decrease in both current assets and the current ratio in the latest quarter warrants close monitoring, as it may indicate tightening liquidity conditions or changes in working capital management strategies.

The analysis of the quarterly financial data reveals several notable trends regarding liquidity and working capital management over the observed periods.

Total quick assets

The total quick assets generally exhibited an upward trend from early 2016 through mid-2021, increasing from approximately 1,746 million USD in April 2016 to a peak of 5,147 million USD in April 2021. This demonstrates a significant accumulation of highly liquid assets over this time frame. However, the last recorded value in October 2021 shows a sharp decline to 1,869 million USD, deviating from the preceding growth pattern.

Current liabilities

Current liabilities followed a variable pattern. From April 2016 to around late 2018, there was a gradual increase, rising from 481 million USD to a high of 1,804 million USD. Subsequently, current liabilities sharply decreased to 612 million USD by June 2019, followed by fluctuations and an increase again towards mid-2021, peaking at 1,268 million USD in April 2021. The final value in October 2021 decreased to 914 million USD.

Quick ratio

The quick ratio displayed considerable variability but remained relatively high throughout most of the reported periods. Initially, it decreased from 3.63 in April 2016 to around 2.20 in late 2018, indicating a reduction in liquidity relative to current liabilities. However, from early 2019 onwards, the quick ratio showed a marked improvement, reaching exceptionally high levels around mid to late 2019, peaking at 6.00 in December 2019. The ratio then decreased but stayed above 3 through 2020 and early 2021, suggesting strong liquidity. The last data point again shows a notable drop to 2.04.

Overall, the company demonstrated strong liquidity with a general increase in quick assets supporting current liabilities. The fluctuations in liabilities and quick ratio suggest periods of strategic liquidity management or changes in operational demand. The sharp declines in both quick assets and quick ratio at the end of the dataset may warrant closer investigation to understand underlying causes.

The data reveals several notable trends across the reported periods. Total cash assets demonstrate an overall upward trajectory from 2016 through mid-2021, growing from $1,343 million in April 2016 to peak at $4,630 million in April 2021. There is a significant increase particularly during 2018, and again in early 2021. However, by October 2021, total cash assets sharply decline to $1,265 million, indicating a substantial reduction after reaching the peak.

Current liabilities follow a more variable pattern. Initially, they rise steadily from $481 million in April 2016 to a high of $1,804 million by December 2018. This is followed by a sharp decrease to $612 million in June 2019. Thereafter, liabilities increase again, fluctuating around $1,100 million through 2020 and early 2021, before declining towards the end of the dataset to $914 million in October 2021.

The cash ratio, which relates total cash assets to current liabilities, reflects these dynamics with considerable volatility. It generally remained above 2.0 during most of the period, indicating healthy liquidity relative to short-term obligations. There was a marked peak during mid-2019, where the cash ratio rose to above 5.0, suggesting a period of exceptionally strong liquidity. Subsequently, the ratio declined gradually through 2020 but recovered again in early 2021 to about 4.9 before dropping sharply to 1.38 by October 2021. This last drop aligns with the significant decrease in total cash assets and a more moderate reduction in current liabilities, indicating a sharp deterioration in short-term liquidity at that time.