Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
SolarEdge Technologies Inc., liquidity ratios
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Current ratio | 3.26 | 3.26 | 3.94 | 2.14 | 3.00 | |
| Quick ratio | 2.17 | 2.20 | 2.73 | 1.41 | 2.14 | |
| Cash ratio | 1.15 | 1.33 | 2.23 | 0.72 | 1.37 |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Current Ratio
- The current ratio shows fluctuations over the observed period. It declined notably from 3 in 2018 to 2.14 in 2019, indicating reduced short-term liquidity. However, it sharply increased to 3.94 in 2020, reflecting a significant improvement in the company’s ability to cover short-term liabilities with current assets. Following this peak, the ratio stabilized somewhat, decreasing moderately to 3.26 in both 2021 and 2022.
- Quick Ratio
- The quick ratio trend mirrors that of the current ratio but with generally lower values, reflecting a more conservative measure of liquidity excluding inventory. It decreased from 2.14 in 2018 to 1.41 in 2019, suggesting a reduction in liquid assets. A recovery occurred in 2020, reaching 2.73, followed by a decline to approximately 2.2 in 2021 and a slight decrease to 2.17 in 2022. This sequence indicates volatility but overall maintenance of healthy liquid asset levels relative to current liabilities.
- Cash Ratio
- The cash ratio, representing the most stringent liquidity measure, demonstrated considerable variability. Starting at 1.37 in 2018, it declined to a low of 0.72 in 2019, signaling a potentially tighter cash position. It then improved substantially to 2.23 in 2020, showing a strong cash reserve relative to liabilities. However, subsequent years saw a reduction to 1.33 in 2021 and further to 1.15 in 2022, still reflecting a conservative cash holding but decreasing over the latter period.
Current Ratio
SolarEdge Technologies Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 2,899,658) | 1,711,291) | 1,719,341) | 932,763) | 678,113) | |
| Current liabilities | 889,717) | 525,181) | 436,099) | 436,714) | 225,718) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 3.26 | 3.26 | 3.94 | 2.14 | 3.00 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 2.36 | 2.02 | 2.54 | — | — | |
| Analog Devices Inc. | 2.02 | 1.94 | 1.84 | 1.32 | — | |
| Applied Materials Inc. | 2.16 | 2.54 | 3.00 | 2.30 | — | |
| Broadcom Inc. | 2.62 | 2.64 | 1.87 | 1.44 | — | |
| Intel Corp. | 1.57 | 2.10 | 1.91 | — | — | |
| KLA Corp. | 2.50 | 2.71 | 2.78 | 2.44 | — | |
| Lam Research Corp. | 2.69 | 3.30 | 3.43 | 3.61 | — | |
| Micron Technology Inc. | 2.89 | 3.10 | 2.71 | 2.58 | — | |
| NVIDIA Corp. | 6.65 | 4.09 | 7.67 | — | — | |
| Qualcomm Inc. | 1.75 | 1.68 | 2.14 | 1.88 | — | |
| Texas Instruments Inc. | 4.70 | 5.33 | 4.28 | — | — | |
| Current Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 2.34 | 2.47 | 2.47 | — | — | |
| Current Ratio, Industry | ||||||
| Information Technology | 1.37 | 1.55 | 1.71 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Current ratio = Current assets ÷ Current liabilities
= 2,899,658 ÷ 889,717 = 3.26
2 Click competitor name to see calculations.
- Current assets
- Current assets demonstrated a consistent upward trend throughout the period under consideration. Starting at approximately 678 million USD at the end of 2018, there was a marked increase to nearly 933 million USD by the end of 2019. This positive progression continued more significantly into 2020, reaching over 1.7 billion USD. Although the figure slightly decreased in 2021 to roughly 1.71 billion USD, it surged substantially in 2022, attaining almost 2.9 billion USD. This pattern indicates robust growth in liquid and short-term assets over the five-year span.
- Current liabilities
- Current liabilities also experienced an increase, though with more variability. From about 226 million USD at the end of 2018, liabilities nearly doubled to roughly 437 million USD in 2019. This level was maintained in 2020 at approximately 436 million USD. However, there was an increase in 2021 to around 525 million USD, followed by a significant rise in 2022, surpassing 889 million USD. This suggests growing short-term obligations, which could be reflective of increased operational scale or higher short-term financing.
- Current ratio
- The current ratio exhibited fluctuations over the analyzed years. Beginning at a strong ratio of 3.00 in 2018, it declined to 2.14 in 2019, indicating a decrease in short-term liquidity relative to liabilities. Nonetheless, the ratio rebounded sharply to 3.94 in 2020, reflecting improved liquidity. The ratio slightly decreased to 3.26 in 2021 and remained stable at this level in 2022. Overall, the current ratio stayed well above 1.0 across the years, suggesting that the company maintained an adequate buffer of current assets over current liabilities, although variations may warrant attention in terms of working capital management.
Quick Ratio
SolarEdge Technologies Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 783,112) | 530,089) | 827,146) | 223,901) | 191,633) | |
| Marketable securities | 241,117) | 167,728) | 143,687) | 91,845) | 118,680) | |
| Trade receivables, net of allowances | 905,146) | 456,339) | 218,706) | 298,383) | 173,579) | |
| Total quick assets | 1,929,375) | 1,154,156) | 1,189,539) | 614,129) | 483,892) | |
| Current liabilities | 889,717) | 525,181) | 436,099) | 436,714) | 225,718) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 2.17 | 2.20 | 2.73 | 1.41 | 2.14 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 1.57 | 1.49 | 1.81 | — | — | |
| Analog Devices Inc. | 1.34 | 1.24 | 1.31 | 0.85 | — | |
| Applied Materials Inc. | 1.17 | 1.64 | 1.95 | 1.38 | — | |
| Broadcom Inc. | 2.18 | 2.27 | 1.56 | 1.21 | — | |
| Intel Corp. | 1.01 | 1.38 | 1.24 | — | — | |
| KLA Corp. | 1.57 | 1.81 | 1.82 | 1.54 | — | |
| Lam Research Corp. | 1.72 | 2.11 | 2.22 | 2.16 | — | |
| Micron Technology Inc. | 1.92 | 2.17 | 1.82 | 1.74 | — | |
| NVIDIA Corp. | 5.96 | 3.56 | 7.04 | — | — | |
| Qualcomm Inc. | 1.01 | 1.34 | 1.75 | 1.65 | — | |
| Texas Instruments Inc. | 3.67 | 4.45 | 3.34 | — | — | |
| Quick Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 1.62 | 1.79 | 1.78 | — | — | |
| Quick Ratio, Industry | ||||||
| Information Technology | 1.09 | 1.30 | 1.47 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 1,929,375 ÷ 889,717 = 2.17
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets demonstrated a substantial upward trend over the five-year period. Starting at approximately $484 million in 2018, the figure increased significantly to nearly $1.93 billion by the end of 2022. This represents a consistent growth trajectory with particularly notable jumps between 2019 and 2020, and again from 2021 to 2022, indicating strengthening liquidity and asset management.
- Current liabilities
- Current liabilities also increased markedly from about $226 million in 2018 to approximately $890 million in 2022. The growth was especially pronounced from 2018 to 2019 and then again between 2021 and 2022. Despite fluctuations in the middle years, the overall rise suggests an expansion in short-term obligations, which may correspond to increased operational scale or strategic financial leverage.
- Quick ratio
- The quick ratio exhibited some variability but remained above 1.0 throughout the period, indicating the company generally maintained a favorable liquidity position. The ratio peaked at 2.73 in 2020, suggesting strong short-term financial health that year. However, it declined to around 2.2 by 2021 and remained steady at about 2.17 in 2022. The slight decrease in the quick ratio despite the increase in quick assets implies that current liabilities grew at a comparatively faster rate, potentially signaling a modest reduction in immediate liquidity relative to obligations.
- Overall analysis
- The data reveals a company with a strong and improving liquidity base, as reflected by growing quick assets and consistently healthy quick ratios. The increase in current liabilities, while considerable, appears to be managed carefully since the quick ratio remains robust above the critical threshold of 1.0. The trends suggest effective management of short-term assets and liabilities, supporting operational demands and possibly funding growth initiatives during the period reviewed.
Cash Ratio
SolarEdge Technologies Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 783,112) | 530,089) | 827,146) | 223,901) | 191,633) | |
| Marketable securities | 241,117) | 167,728) | 143,687) | 91,845) | 118,680) | |
| Total cash assets | 1,024,229) | 697,817) | 970,833) | 315,746) | 310,313) | |
| Current liabilities | 889,717) | 525,181) | 436,099) | 436,714) | 225,718) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 1.15 | 1.33 | 2.23 | 0.72 | 1.37 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 0.92 | 0.85 | 0.95 | — | — | |
| Analog Devices Inc. | 0.60 | 0.71 | 0.77 | 0.43 | — | |
| Applied Materials Inc. | 0.35 | 0.86 | 1.29 | 0.81 | — | |
| Broadcom Inc. | 1.76 | 1.94 | 1.20 | 0.73 | — | |
| Intel Corp. | 0.88 | 1.03 | 0.97 | — | — | |
| KLA Corp. | 0.94 | 1.19 | 1.17 | 0.98 | — | |
| Lam Research Corp. | 0.77 | 1.25 | 1.55 | 1.54 | — | |
| Micron Technology Inc. | 1.24 | 1.34 | 1.23 | 1.24 | — | |
| NVIDIA Corp. | 4.89 | 2.95 | 6.11 | — | — | |
| Qualcomm Inc. | 0.54 | 1.04 | 1.29 | 1.37 | — | |
| Texas Instruments Inc. | 3.04 | 3.79 | 2.75 | — | — | |
| Cash Ratio, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 1.15 | 1.30 | 1.32 | — | — | |
| Cash Ratio, Industry | ||||||
| Information Technology | 0.67 | 0.89 | 1.06 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 1,024,229 ÷ 889,717 = 1.15
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets of the company demonstrated a substantial increase over the five-year period. Starting at approximately $310 million in 2018, there was a slight rise in 2019, followed by a significant surge reaching nearly $971 million in 2020. After a decline in 2021 to about $698 million, cash assets increased again in 2022 to over $1 billion, marking the highest value in the timeframe analyzed.
- Current Liabilities
- Current liabilities exhibited a steady upward trend throughout the years. The liabilities grew from approximately $226 million in 2018 to nearly $437 million in both 2019 and 2020. Thereafter, a noticeable increase occurred in 2021, reaching about $525 million, and then a sharp rise to approximately $890 million in 2022. The escalation in current liabilities especially in the last two years reflects a growing financial obligation within the company's short-term liabilities.
- Cash Ratio
- The cash ratio fluctuated considerably across the period. In 2018, the ratio stood at 1.37, indicating a strong liquidity position with cash assets covering current liabilities more than once. The ratio dropped sharply to 0.72 in 2019, the lowest recorded, suggesting a weaker liquidity. A strong recovery occurred in 2020 with the ratio rising to 2.23, implying a significant cushion of cash relative to current liabilities. This was followed by decreases in 2021 and 2022, where the ratio declined to 1.33 and 1.15 respectively, showing that while liquidity remained comfortable, it diminished compared to the peak in 2020.
- Overall Insights
- The company’s cash assets exhibited strong growth with some volatility, peaking in 2022. Despite this, current liabilities consistently increased, particularly sharply in the final year, which put some pressure on liquidity ratios. The cash ratio indicates that the company generally maintained sufficient liquidity to cover short-term liabilities, albeit with notable fluctuations. This pattern suggests that while cash reserves are robust, the increasing liabilities might require monitoring to ensure sustained financial stability.