Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
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- Common-Size Income Statement
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Selected Financial Data since 2015
- Return on Equity (ROE) since 2015
- Total Asset Turnover since 2015
- Price to Earnings (P/E) since 2015
- Price to Operating Profit (P/OP) since 2015
- Price to Sales (P/S) since 2015
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Liquidity Ratios (Summary)
PayPal Holdings Inc., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 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).
- Current Ratio
- The current ratio exhibited moderate fluctuations over the observed period, starting at 1.22 in the first quarter of 2019. It reached a peak of 1.43 by the end of 2019, indicating an improvement in short-term liquidity during that year. From 2020 onward, the ratio generally declined to around 1.29 by the first quarter of 2023, suggesting a slight reduction in current asset coverage relative to current liabilities but remaining above 1.0 throughout, which typically signals an adequate ability to cover short-term obligations.
- Quick Ratio
- The quick ratio followed a trend similar to the current ratio, beginning at 1.18 in early 2019, increasing to a high of 1.40 by the end of 2019, which reflects a strong position in liquid assets excluding inventory. Post-2019, this ratio experienced a gradual decline, settling near 1.24 by the first quarter of 2023. This trajectory indicates a slight decrease in highly liquid assets relative to current liabilities, but liquidity conditions remain stable and relatively strong.
- Cash Ratio
- The cash ratio, representing the most conservative liquidity measure, started at 1.07 in March 2019, climbed to a peak of approximately 1.27 in late 2020, and subsequently declined to around 1.05 by the first quarter of 2023. This suggests that cash and cash equivalents availability fluctuated but were maintained at levels sufficient to cover current liabilities. The decreasing trend after 2020 points to a modest reduction in cash reserves relative to current obligations, yet the ratio consistently stayed above 1.0, illustrating a solid cash position.
- Summary
- All three liquidity ratios indicate that the company maintained a stable and generally strong short-term financial position over the analyzed period. While there was noticeable improvement in liquidity ratios up to the end of 2019, likely reflecting operational or strategic shifts, a gradual decline thereafter suggests a slight contraction in liquidity buffers. Nonetheless, the ratios remain above the benchmark level of 1.0, implying the company consistently had sufficient current assets and cash on hand to meet its short-term liabilities throughout the timeframe.
Current Ratio
PayPal Holdings Inc., current ratio calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Current assets | |||||||||||||||||||||||
| Current liabilities | |||||||||||||||||||||||
| Liquidity Ratio | |||||||||||||||||||||||
| Current ratio1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Current Ratio, Competitors2 | |||||||||||||||||||||||
| Accenture PLC | |||||||||||||||||||||||
| Adobe Inc. | |||||||||||||||||||||||
| AppLovin Corp. | |||||||||||||||||||||||
| Cadence Design Systems Inc. | |||||||||||||||||||||||
| CrowdStrike Holdings Inc. | |||||||||||||||||||||||
| Datadog Inc. | |||||||||||||||||||||||
| International Business Machines Corp. | |||||||||||||||||||||||
| Intuit Inc. | |||||||||||||||||||||||
| Microsoft Corp. | |||||||||||||||||||||||
| Oracle Corp. | |||||||||||||||||||||||
| Palantir Technologies Inc. | |||||||||||||||||||||||
| Palo Alto Networks Inc. | |||||||||||||||||||||||
| Salesforce Inc. | |||||||||||||||||||||||
| ServiceNow Inc. | |||||||||||||||||||||||
| Synopsys Inc. | |||||||||||||||||||||||
| Workday Inc. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 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).
1 Q1 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- Current assets exhibited an overall upward trend over the observed periods. Starting from approximately $34.9 billion in March 2019, there was a consistent increase with some acceleration beginning in mid-2020. By the end of 2022, current assets had reached a peak of about $57.5 billion, followed by a slight decrease to roughly $56.6 billion by March 2023. This growth indicates progressive accumulation of liquid and short-term assets over the years.
- Current Liabilities
- Current liabilities also increased notably during the period. Beginning around $28.6 billion in March 2019, they experienced a substantial rise, particularly from early 2020 onward. By the end of 2022, liabilities approached approximately $45.1 billion, slightly declining to near $43.9 billion in March 2023. This rise suggests increased short-term obligations commensurate with growth in assets, though the slight retreat in early 2023 may indicate improved liability management or reduced short-term debt.
- Current Ratio
- The current ratio started at 1.22 in March 2019 and showed some variability, peaking at 1.43 toward the end of 2019. Following this peak, the ratio generally declined until it reached a low near 1.19 in early 2022. Since then, it demonstrated a gradual recovery, stabilizing around 1.28 by March 2023. Although the ratio remains above 1.0, indicating sufficient liquidity to cover current liabilities, the downward trend until 2022 signals a relative tightening of short-term financial flexibility. The recent stabilization suggests efforts to maintain adequate liquidity levels despite rising liabilities.
- Summary
- The financial data reflect substantial growth in both current assets and current liabilities, highlighting an expansion in the scale of short-term operations. The current ratio, while fluctuating, has remained above 1, which generally signifies adequate liquidity. The overall pattern suggests the company has effectively managed its current assets in relation to liabilities through a period of growth and some volatility, maintaining a balanced liquidity position as of the latest periods.
Quick Ratio
PayPal Holdings Inc., quick ratio calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||
| Short-term investments | |||||||||||||||||||||||
| Accounts receivable, net | |||||||||||||||||||||||
| Loans and interest receivable, net of allowances | |||||||||||||||||||||||
| Loans and interest receivable, held for sale | |||||||||||||||||||||||
| Funds receivable and customer accounts | |||||||||||||||||||||||
| Total quick assets | |||||||||||||||||||||||
| Current liabilities | |||||||||||||||||||||||
| Liquidity Ratio | |||||||||||||||||||||||
| Quick ratio1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Quick Ratio, Competitors2 | |||||||||||||||||||||||
| Accenture PLC | |||||||||||||||||||||||
| Adobe Inc. | |||||||||||||||||||||||
| AppLovin Corp. | |||||||||||||||||||||||
| Cadence Design Systems Inc. | |||||||||||||||||||||||
| CrowdStrike Holdings Inc. | |||||||||||||||||||||||
| Datadog Inc. | |||||||||||||||||||||||
| International Business Machines Corp. | |||||||||||||||||||||||
| Intuit Inc. | |||||||||||||||||||||||
| Microsoft Corp. | |||||||||||||||||||||||
| Oracle Corp. | |||||||||||||||||||||||
| Palantir Technologies Inc. | |||||||||||||||||||||||
| Palo Alto Networks Inc. | |||||||||||||||||||||||
| Salesforce Inc. | |||||||||||||||||||||||
| ServiceNow Inc. | |||||||||||||||||||||||
| Synopsys Inc. | |||||||||||||||||||||||
| Workday Inc. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 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).
1 Q1 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total Quick Assets
- The total quick assets displayed an overall increasing trend from March 2019 through March 2023. Starting at approximately $33.9 billion in early 2019, the quick assets rose steadily over the periods, peaking around $55.6 billion by the end of 2022 before a slight decrease to about $54.4 billion in the first quarter of 2023. This growth reflects an expansion in liquid assets available to meet short-term obligations.
- Current Liabilities
- Current liabilities also showed an upward trajectory over the analyzed period. Beginning near $28.6 billion in March 2019, liabilities rose to a high point exceeding $45 billion towards the end of 2022 and the beginning months of 2023. Although there was some volatility within quarters, the general pattern indicates increasing short-term liabilities alongside the growth in quick assets.
- Quick Ratio
- The quick ratio consistently remained above 1.1 throughout the period, indicating the company maintained more quick assets than its current liabilities at all times. There was a noticeable peak around late 2019 and 2020 with the ratio close to 1.4, suggesting a strong immediate liquidity position during that period. Following this peak, the ratio declined gradually, stabilizing near 1.2 to 1.24 from mid-2021 through early 2023. This slight decrease indicates a moderate reduction in liquidity buffer but still reflects a comfortable margin over liabilities.
- Overall Analysis
- The data indicates that the company has managed to increase its quick assets in tandem with rising current liabilities, maintaining a prudent liquidity position as evidenced by the quick ratio consistently above 1. The peak in liquidity during 2019 and 2020 might have been reflective of strategic cash or liquid asset accumulation possibly in response to external conditions. The subsequent gradual decline in the quick ratio suggests a rebalancing or deployment of liquid assets, yet the ratio remains at safe levels. The increase in both quick assets and current liabilities denotes growth in operational scale, but the stable quick ratio implies effective management of short-term financial obligations.
Cash Ratio
PayPal Holdings Inc., cash ratio calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||
| Short-term investments | |||||||||||||||||||||||
| Funds receivable and customer accounts | |||||||||||||||||||||||
| Total cash assets | |||||||||||||||||||||||
| Current liabilities | |||||||||||||||||||||||
| Liquidity Ratio | |||||||||||||||||||||||
| Cash ratio1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Cash Ratio, Competitors2 | |||||||||||||||||||||||
| Accenture PLC | |||||||||||||||||||||||
| Adobe Inc. | |||||||||||||||||||||||
| AppLovin Corp. | |||||||||||||||||||||||
| Cadence Design Systems Inc. | |||||||||||||||||||||||
| CrowdStrike Holdings Inc. | |||||||||||||||||||||||
| Datadog Inc. | |||||||||||||||||||||||
| International Business Machines Corp. | |||||||||||||||||||||||
| Intuit Inc. | |||||||||||||||||||||||
| Microsoft Corp. | |||||||||||||||||||||||
| Oracle Corp. | |||||||||||||||||||||||
| Palantir Technologies Inc. | |||||||||||||||||||||||
| Palo Alto Networks Inc. | |||||||||||||||||||||||
| Salesforce Inc. | |||||||||||||||||||||||
| ServiceNow Inc. | |||||||||||||||||||||||
| Synopsys Inc. | |||||||||||||||||||||||
| Workday Inc. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 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).
1 Q1 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Trend in Total Cash Assets
- Total cash assets demonstrated a general upward trajectory from March 2019 through March 2023. Starting at approximately $30.6 billion in early 2019, the cash holdings increased steadily with some periods of accelerated growth, notably during mid to late 2020, where the balance rose from about $33 billion to nearly $46.5 billion by the end of 2020. Following this peak, total cash assets fluctuated within the $45 billion to $48 billion range, showing minor declines and recoveries through 2021, 2022, and into early 2023. Ultimately, the cash position in March 2023 remained relatively stable compared to the previous quarters.
- Trend in Current Liabilities
- Current liabilities exhibited an overall increasing trend across the same period. Beginning near $28.6 billion in early 2019, there was a decrease around the third quarter of 2019 but then a consistent rise from early 2020 onward. Current liabilities grew sharply during 2020, peaking towards the end of that year at approximately $38.4 billion. Subsequently, liabilities continued climbing through 2021 and 2022, reaching a maximum of about $45.1 billion in late 2022. A slight reduction was observed in the first quarter of 2023, though the level remained elevated compared to the beginning of the examined period.
- Cash Ratio Analysis
- The cash ratio, representing the company's liquidity relative to its current liabilities, remained above 1.0 throughout the periods, indicating an ability to cover current liabilities with cash and cash equivalents. Starting at approximately 1.07 in early 2019, the ratio improved marginally through 2019 and remained relatively stable through 2020, peaking around 1.27 in the latter part of 2020. However, starting in 2021, the ratio exhibited a gradual decline, reaching its lowest point near 1.02 in mid-2022. Since then, a modest recovery occurred, stabilizing around 1.05 by March 2023. This pattern suggests a slight reduction in the liquidity buffer relative to liabilities over time, despite maintaining coverage above the critical threshold of one.
- Overall Insights
- Over the examined quarters, the company maintained a strong cash position relative to current liabilities, although current liabilities increased at a higher rate than cash assets, leading to a gradual decline in the cash ratio. The fluctuations in cash assets and liabilities might reflect operational cycles, investment activities, or financing strategies. The maintenance of a cash ratio above one throughout the period indicates a conservative liquidity posture, ensuring that short-term obligations could be met without requiring asset liquidation. The recent stabilization of key metrics in early 2023 could indicate a period of financial consolidation following prior growth and variability.