Shockwave Medical Inc. (NASDAQ:SWAV)

The analysis of the liquidity ratios over the presented periods reveals several notable trends and fluctuations.

Current Ratio

The current ratio demonstrates a general decline from early 2020 through late 2021, moving from a very high level of 10.53 in March 2020 down to a lower but still strong 5.54 by December 2021. Notably, there is a rebound in liquidity beginning in early 2022, with the ratio increasing to 7.29 by September 2022. This is followed by another decline reaching 4.16 in March 2023, the lowest point in the range, before sharply rising again in the latter quarters of 2023 to peak at 14.43 in September before slightly tapering to 13.81 by March 2024. Overall, despite fluctuations, the current ratio remains well above the standard benchmark of 1, indicating strong short-term liquidity throughout the entire period.

Quick Ratio

The quick ratio trends closely mirror those of the current ratio, suggesting consistent proportions of liquid assets relative to current liabilities. Initial values start at 9.5 in March 2020, decreasing gradually to 4.62 by December 2021. The ratio improves modestly in 2022 before dropping again to around 3.53 in March 2023. Thereafter, a pronounced recovery occurs, peaking at 12.99 in September 2023 and maintaining high levels through March 2024. This pattern indicates persistent robust liquidity excluding inventory, highlighting strong capability to cover short-term obligations with quick assets.

Cash Ratio

The cash ratio maintains a similar trajectory but generally depicts slightly lower values compared to the current and quick ratios, reflecting a more conservative measure based solely on cash and cash equivalents. Starting at 9.08 in March 2020, the ratio declines steadily until reaching a low of 2.94 in March 2023. After this trough, a strong upward trend follows, with the cash ratio increasing sharply to 11.73 in September 2023 and remaining elevated through the first quarter of 2024. This indicates enhanced cash liquidity in recent quarters after a period of relative constraint, supporting a strong short-term cash position at the end of the timeline.

In summary, all three liquidity ratios display significant volatility but maintain values well above typical industry benchmarks, emphasizing a consistent and strong liquidity position. While the ratios declined through mid-2021 into early 2023, they subsequently experienced marked recovery and reached historically high levels by late 2023 and early 2024. This suggests effective liquidity management and an improved ability to meet short-term liabilities with readily available assets in the most recent periods.

The analysis of the quarterly financial data reveals notable trends in the company's liquidity position over the observed periods. The current assets demonstrate an overall upward trajectory, increasing from approximately $198 million at the beginning of 2020 to over $1.27 billion by the first quarter of 2024. This substantial growth indicates a significant accumulation of liquid and short-term assets, which could reflect expanding operations or improved asset management.

Conversely, current liabilities show a more moderate increase, rising from around $18.8 million in early 2020 to approximately $92.3 million at the beginning of 2024. While liabilities fluctuate across quarters, the growth pace is less pronounced than that of current assets. Peaks in current liabilities are observed in certain quarters, such as the first quarter of 2023, where liabilities surged to about $142 million before decreasing again in subsequent periods.

The current ratio, a key indicator of short-term financial health, exhibits considerable variability but generally remains well above the threshold of 1, indicating strong liquidity. Initially very high at 10.53 in March 2020, the ratio peaked at 14.9 in June 2020, followed by a gradual decline to a low near 4.16 in March 2023. This dip corresponds with the spike in current liabilities during the same timeframe. Subsequently, the ratio rebounded sharply, reaching as high as 14.43 in September 2023 and maintaining elevated levels above 11 in early 2024.

Overall, the data suggests that the company maintains a consistently strong liquidity position, supported by a substantial and growing base of current assets relative to current liabilities. The occasional fluctuations in the current ratio and liabilities might reflect strategic short-term financing activities or timing of payables and receivables. The marked increase in current assets toward the end of the observed period further strengthens the company's ability to meet short-term obligations and may indicate enhanced operational capacity or investment in working capital.

Current Assets

Exhibit a consistent upward trend from $198 million to $1.27 billion over four years, indicating asset growth and potential operational expansion.

Current Liabilities

Increase moderately from $18.8 million to $92.3 million, with peaks corresponding to declines in liquidity ratios, suggesting variable short-term obligations.

Current Ratio

Remains well above 1 throughout the period, reflecting strong liquidity; fluctuates due to changes in liabilities and asset levels but ends on a notably strong note above 11.

Total Quick Assets

The total quick assets demonstrated a generally upward trend over the analyzed periods. Starting at approximately $178.2 million in March 2020, the value increased steadily with some fluctuations, reaching over $1.15 billion by March 2024. Notably, there was a significant acceleration in growth from December 2022 onward, with total quick assets jumping from $375.9 million to more than $1.1 billion within approximately fifteen months. This rapid growth indicates a strong enhancement in liquid resources available to the company.

Current Liabilities

Current liabilities showed a less consistent pattern with periods of both increases and decreases. Starting at roughly $18.8 million in March 2020, liabilities generally rose through to December 2021, peaking near $51 million. This was followed by fluctuations, including a marked surge in March 2023 to approximately $142 million, before declining and stabilizing near the $92 million level by March 2024. The significant spike and subsequent decline in liabilities during 2023 suggest episodic financial obligations or changes in short-term debt structure.

Quick Ratio

The quick ratio, a measure of short-term liquidity, initially exhibited a high level, peaking at 13.4 in June 2020. It then declined gradually through 2021, falling to a low of 3.53 in March 2023, reflecting a relative decrease in liquid assets compared to liabilities during that period. After March 2023, the quick ratio increased sharply, reaching 12.99 in September 2023 and maintaining a high level above 10 by March 2024. These movements indicate varying liquidity conditions, with reduced buffer in early 2023 followed by a strong recovery in liquidity position by early 2024.

Overall Analysis

The company appears to have significantly strengthened its liquid asset base over the four-year period, as evidenced by the substantial increase in total quick assets. Although current liabilities have increased overall, the more rapid growth in quick assets has contributed to maintaining a healthy and improving quick ratio in the most recent periods. The fluctuations in the quick ratio and liabilities suggest the company may have managed short-term obligations more actively during 2023, resulting in temporary dips in liquidity before restoring a robust position. This pattern reflects a generally strong liquidity position with successful management of working capital and financial flexibility.

Total Cash Assets

The total cash assets demonstrate a generally increasing trend from March 31, 2020, to March 31, 2024. Beginning at approximately $170 million, cash assets rose steadily with some fluctuations, notably peaking at over $990 million in December 31, 2023. Earlier in the period, growth was moderate, with occasional declines such as between June 2020 and December 2020. Post-2022, the upward trend intensified, indicating enhanced liquidity or capital generation activities during this phase.

Current Liabilities

Current liabilities have shown an overall upward trajectory across the quarters, increasing from approximately $19 million in March 2020 to about $92 million in March 2024. There were periodic rises and falls, with notable spikes in March 2023 and December 2023. Despite fluctuations, liabilities grew at a slower pace compared to cash assets, indicating improved balance sheet strength due to increasing cash reserves relative to short-term obligations.

Cash Ratio

The cash ratio, measuring cash assets relative to current liabilities, experienced a significant decline from a very high level of 9.08 in March 2020 to a low near 2.94 in March 2023. This suggests that while cash assets were substantial, current liabilities increased at a faster rate during this interval. However, from March 2023 onward, the ratio rebounded sharply, reaching levels above 11 by March 2024, reflecting a pronounced recovery in liquidity buffer relative to short-term debts.

Overall Analysis

The company shows a strong capacity to increase cash holdings significantly over the analyzed period, particularly in the last year. Despite rising current liabilities, cash assets have expanded more rapidly, resulting in a strengthened liquidity position, as evidenced by the cash ratio rebound in the latest reported quarters. The temporary dip in liquidity ratios in early 2023 suggests a phase of increased operational or financing activity requiring additional current liabilities, later balanced by growth in cash reserves. This overall trend points to improved financial flexibility and the ability to meet short-term obligations comfortably.