Illumina Inc. (NASDAQ:ILMN)

Current Ratio

The current ratio demonstrated significant variation over the observed periods. Initially, it started at a relatively high level near 3.5 and increased to above 4.2 by late 2017. However, it then declined through 2018, dropping below 2.5. From early 2019 to the end of 2019, the ratio rose sharply, peaking around 6.8, suggesting a strong liquidity position during this interval. In 2020, the ratio decreased to values between 3.6 and 4.1, indicating some normalization. Moving into 2021, the current ratio again fluctuated, reaching above 6.0 mid-year before falling to approximately 2.7 in the final quarter. Overall, the current ratio shows cyclical liquidity dynamics with notable peaks and declines throughout the timeframe.

Quick Ratio

The quick ratio followed a trend roughly similar to the current ratio but consistently at lower values, reflecting the exclusion of inventory from liquid assets. Starting slightly below 3.0 in early 2017, it increased to a high around 3.7 by the end of 2017, then decreased gradually to nearly 2.2 by late 2018. There was a marked improvement in 2019, where the ratio almost doubled to near 6.0 levels, indicating enhanced near-cash asset availability relative to current liabilities. In 2020, the quick ratio reverted to a range between 3.2 and 3.6, followed by a peak above 5.5 mid-2021 and a sharp drop to around 2.0 by the end of the period. This pattern reflects fluctuating liquidity with periods of very strong quick asset coverage.

Cash Ratio

The cash ratio exhibited the lowest values among the liquidity ratios but mirrored their overall movements. Beginning near 2.5 in early 2017, it increased modestly to around 3.1 by late 2017. A decline ensued through 2018 to below 2.0, suggesting a reduction in highly liquid cash and equivalents relative to current liabilities. There was a robust rebound in 2019, where the ratio peaked above 5.1, indicating a substantial cash position that year. During 2020, the cash ratio settled around 2.8 to 3.2, highlighting moderate cash coverage. In 2021, the ratio climbed to nearly 4.9 before descending sharply to approximately 1.4 by the final quarter. These fluctuations depict changing levels of readily available cash influencing the company's short-term financial flexibility.

The analysis of the quarterly financial data reveals several notable trends in the liquidity position of the company over the observed periods.

Current Assets

Current assets showed a consistent upward trend from April 2017 through July 2021, increasing from approximately 2,517 million USD to a peak of 5,642 million USD. This growth indicates an accumulation of liquid or near-liquid resources over time. However, there was a significant decline in the last quarter analyzed (October 2021), where current assets dropped sharply to 2,451 million USD, nearing levels from early in the observed period.

Current Liabilities

Current liabilities exhibited more volatility compared to current assets. Initially, they were relatively stable and low (around 700 million USD), but from April 2018 onward, current liabilities increased markedly, peaking around the end of 2018 near 1,800 million USD. Afterward, liabilities fluctuated, decreasing to approximately 600 million USD in mid-2019, then rising again towards approximately 1,270 million USD in mid-2021, before a small increase toward the end of the period. The variability implies changes in short-term obligations, possibly related to operational or financing adjustments.

Current Ratio

The current ratio exhibited considerable fluctuations, influenced by the changes in current assets and liabilities. In the early period (2017), the ratio was robust, exceeding 3.5 and peaking above 4, indicating strong short-term liquidity. During 2018, the current ratio declined to around 2.5, reflecting a relative increase in liabilities compared to assets. In 2019, the ratio surged dramatically, reaching above 6.7, driven primarily by a decline in liabilities and steady asset levels, illustrating an exceptionally strong liquidity position. Following that peak, the ratio decreased but remained above 3 until early 2021, after which it briefly increased to over 6.0. Toward the last quarter of 2021, consistent with the drop in current assets and steady liabilities, the current ratio decreased sharply to approximately 2.7, which still signifies adequate liquidity but considerably weaker than the mid-period peak.

Overall, the company’s liquidity profile over the reported quarters displayed strong but variable short-term financial strength. The significant fluctuations in the current ratio appear to be driven more by variability in current liabilities and occasional sharp declines in current assets. The sharp drop in current assets and current ratio in the latest quarter analyzed signals the need for closer attention to working capital management and potential short-term liquidity risks moving forward.

Total Quick Assets

The total quick assets displayed a generally increasing trend from early 2017 through mid-2021, rising from approximately $2.15 billion to peak around $5.15 billion in April 2021. This reflects substantial growth in liquid assets during this period. However, there is a notable decline in the most recent quarter, with quick assets dropping sharply to about $1.87 billion by October 2021, indicating a significant reduction in immediate liquidity.

Current Liabilities

Current liabilities exhibited fluctuations over the analyzed periods without a strong directional trend. Initially, liabilities ranged between $600 million and $700 million through 2017. From early 2018 to late 2018, there was a marked increase, peaking near $1.8 billion, followed by a decrease in the first half of 2019. Subsequently, liabilities rose again to approximately $1.2 billion by late 2020 and early 2021, then declined in mid-2021 to around $870 million, maintaining a relatively stable level into late 2021.

Quick Ratio

The quick ratio fluctuated significantly throughout the periods. Starting at about 3.0 in early 2017, it rose gradually before dipping below 2.5 during late 2017 to 2018, suggesting reduced liquidity relative to current liabilities during that time. From early 2019 through 2020, the ratio increased markedly, reaching values near 6.0, indicating highly strong liquidity positions. In 2021, the ratio remained elevated, peaking above 5.5 in mid-year before dropping sharply to just above 2.0 in the last recorded quarter, aligning with the observed reduction in quick assets.

Summary Insights

Overall, the company experienced growth in liquid assets and maintained a strong liquidity position for most of the analyzed timeframe, especially evident during 2019 and 2020. The current liabilities showed variability without a clear directional change but generally stayed within a moderate range relative to liquid assets. The recent sharp decline in quick assets and the quick ratio in late 2021 warrants attention, as it may indicate increased liquidity risk or changes in working capital management. Monitoring future periods will be essential to assess whether this trend signifies a short-term anomaly or a longer-term shift in financial dynamics.

The analysis of the financial data reveals notable fluctuations and trends in liquidity and short-term obligations over the periods examined.

Total Cash Assets

The total cash assets exhibited a generally increasing trend from April 2017 through July 2021, starting at 1,778 million US dollars and peaking at 4,630 million US dollars in April 2021. This marks a substantial growth in cash holdings over the years. However, a sharp decline is observed in October 2021, when cash assets dropped significantly to 1,265 million US dollars. This sudden decrease may indicate large cash outflows or investments executed during this last period.

Current Liabilities

Current liabilities experienced considerable volatility throughout the periods. Initially, liabilities hovered near the 700 million dollar range, increasing substantially by the end of 2018 to over 1,800 million US dollars. Notably, in early 2019, there was a sharp decline in current liabilities to around 600 million dollars, with subsequent moderate increases through 2020. From early 2021 onwards, liabilities remained relatively steady, fluctuating between approximately 874 and 1,268 million US dollars, indicating some stabilization in short-term obligations after the prior periods of volatility.

Cash Ratio

The cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, showed significant variation. The ratio remained above 2 for most periods, peaking exceptionally high in mid-2019 with values over 5, reflecting an extremely strong liquidity position at that time. Generally, elevated ratios were maintained through mid-2021, suggesting robust short-term financial health. However, the ratio dropped sharply to 1.38 in October 2021, paralleling the decrease in total cash assets and indicating a weakening liquidity position relative to current liabilities.

Overall, the data indicates a trend of accumulating cash reserves and managing liabilities effectively up to mid-2021. The steep declines in both total cash assets and the cash ratio in the final quarter suggest a significant change in liquidity, warranting further investigation to understand underlying causes such as large expenditures or strategic cash deployments.