Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Yahoo! Inc., liquidity ratios
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Current ratio | 6.31 | 5.88 | 2.14 | 3.75 | 4.38 | |
| Quick ratio | 6.14 | 5.41 | 1.99 | 3.27 | 4.02 | |
| Cash ratio | 5.30 | 4.59 | 1.77 | 2.54 | 3.24 |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
- Current Ratio
- The current ratio showed a decreasing trend from 4.38 at the end of 2012 to 2.14 in 2014, indicating a reduction in short-term liquidity during this period. However, there was a significant recovery in 2015 and 2016, with the ratio increasing sharply to 5.88 and then to 6.31, suggesting an improvement in the company's ability to cover current liabilities with current assets towards the latter years.
- Quick Ratio
- The quick ratio followed a similar pattern, declining from 4.02 in 2012 to 1.99 in 2014, reflecting a weakening in liquid asset coverage excluding inventory. Subsequently, the ratio increased markedly to 5.41 in 2015 and further to 6.14 in 2016, indicating enhanced liquid asset availability relative to current liabilities over the last two years.
- Cash Ratio
- The cash ratio decreased from 3.24 in 2012 to 1.77 in 2014, pointing to a reduced proportion of cash and cash equivalents to current liabilities. A notable improvement occurred in 2015 and 2016 with the cash ratio rising to 4.59 and 5.3 respectively, demonstrating a strengthened cash position and greater immediate liquidity.
Current Ratio
Yahoo! Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 8,126,160) | 7,507,319) | 9,699,107) | 5,025,857) | 5,652,713) | |
| Current liabilities | 1,287,424) | 1,277,380) | 4,528,581) | 1,340,312) | 1,290,232) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 6.31 | 5.88 | 2.14 | 3.75 | 4.38 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Accenture PLC | — | — | — | — | — | |
| Adobe Inc. | — | — | — | — | — | |
| Cadence Design Systems Inc. | — | — | — | — | — | |
| CrowdStrike Holdings Inc. | — | — | — | — | — | |
| Datadog Inc. | — | — | — | — | — | |
| Fair Isaac Corp. | — | — | — | — | — | |
| 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-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
1 2016 Calculation
Current ratio = Current assets ÷ Current liabilities
= 8,126,160 ÷ 1,287,424 = 6.31
2 Click competitor name to see calculations.
The analysis of the annual financial data reveals several noteworthy trends in liquidity and working capital management over the reported periods.
- Current assets
- The current assets demonstrate variability across the years. Initially, there is a decline from 5,652,713 thousand USD in 2012 to 5,025,857 thousand USD in 2013. Following this, a significant increase is observed in 2014, reaching 9,699,107 thousand USD. This peak is succeeded by a reduction to 7,507,319 thousand USD in 2015, with a slight recovery to 8,126,160 thousand USD by the end of 2016. This pattern reflects fluctuations possibly related to changes in inventory, receivables, or cash holdings.
- Current liabilities
- Current liabilities remain relatively stable during the initial two years, moving slightly from 1,290,232 thousand USD in 2012 to 1,340,312 thousand USD in 2013. A marked increase is identified in 2014, more than tripling to 4,528,581 thousand USD. However, this is followed by a sharp decrease to 1,277,380 thousand USD in 2015 and a marginal increase to 1,287,424 thousand USD in 2016. This significant fluctuation in 2014 suggests a one-time or exceptional rise in short-term obligations, which then normalized subsequently.
- Current ratio
- The current ratio, a key liquidity indicator, shows a declining trend from 4.38 in 2012 to 2.14 in 2014, indicating a reduction in liquidity relative to short-term liabilities. In 2015, the ratio exhibits a notable increase to 5.88, followed by a further rise to 6.31 in 2016. The improvement in later years reflects enhanced liquidity, likely due to the reduction in current liabilities combined with the maintaining of higher current assets, suggesting better short-term financial health and an ability to cover obligations.
Overall, the data indicate a period of volatility in both current assets and liabilities in 2014, with a consequent compression of liquidity. In contrast, the later years show stabilization and improvement in liquidity conditions. The company appears to have strengthened its capacity to meet short-term liabilities toward the end of the period under review.
Quick Ratio
Yahoo! Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 1,119,469) | 1,631,911) | 2,667,916) | 2,077,590) | 2,667,778) | |
| Short-term marketable securities | 5,700,925) | 4,225,112) | 5,327,412) | 1,330,304) | 1,516,175) | |
| Accounts receivable, net of allowance | 1,084,267) | 1,047,504) | 1,032,704) | 979,559) | 1,008,448) | |
| Total quick assets | 7,904,661) | 6,904,527) | 9,028,032) | 4,387,453) | 5,192,401) | |
| Current liabilities | 1,287,424) | 1,277,380) | 4,528,581) | 1,340,312) | 1,290,232) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 6.14 | 5.41 | 1.99 | 3.27 | 4.02 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Accenture PLC | — | — | — | — | — | |
| Adobe Inc. | — | — | — | — | — | |
| Cadence Design Systems Inc. | — | — | — | — | — | |
| CrowdStrike Holdings Inc. | — | — | — | — | — | |
| Datadog Inc. | — | — | — | — | — | |
| Fair Isaac Corp. | — | — | — | — | — | |
| 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-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
1 2016 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 7,904,661 ÷ 1,287,424 = 6.14
2 Click competitor name to see calculations.
The financial data reveals several noteworthy trends over the five-year period analyzed. Total quick assets exhibited significant fluctuations, initially declining from approximately 5.19 billion USD at the end of 2012 to about 4.39 billion USD by the end of 2013. This was followed by a pronounced increase in 2014, reaching around 9.03 billion USD, before decreasing again in 2015 to approximately 6.90 billion USD, and subsequently rising to roughly 7.90 billion USD in 2016. These variations suggest fluctuating liquidity positions or asset management strategies during the period.
In contrast, current liabilities remained relatively stable, fluctuating within a narrower range compared to quick assets. The liabilities increased slightly from 1.29 billion USD at the end of 2012 to about 1.34 billion USD in 2013, then sharply increased to 4.53 billion USD in 2014. However, this spike was not sustained as the liabilities dropped significantly to approximately 1.28 billion USD in 2015 and remained close to that level at the end of 2016, indicating possible short-term financing or operational changes impacting current obligations.
The quick ratio, which measures the ability to cover current liabilities with liquid assets, reflects these asset and liability changes. The ratio decreased from 4.02 in 2012 to 1.99 in 2014, indicating a reduced buffer of liquid assets relative to liabilities, likely coinciding with the spike in current liabilities in 2014. However, it rebounded markedly to 5.41 in 2015 and increased further to 6.14 in 2016, demonstrating a strengthened liquidity position and an enhanced capacity to meet short-term obligations without relying on inventory or longer-term assets.
Overall, the data suggest a period of volatility in liquidity and short-term financial structure, with a peak in both quick assets and liabilities in 2014, followed by a significant improvement in liquidity ratios over the last two years of observation. This could reflect strategic adjustments to balance sheet management aimed at maintaining financial stability and reducing short-term risk exposure.
Cash Ratio
Yahoo! Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 1,119,469) | 1,631,911) | 2,667,916) | 2,077,590) | 2,667,778) | |
| Short-term marketable securities | 5,700,925) | 4,225,112) | 5,327,412) | 1,330,304) | 1,516,175) | |
| Total cash assets | 6,820,394) | 5,857,023) | 7,995,328) | 3,407,894) | 4,183,953) | |
| Current liabilities | 1,287,424) | 1,277,380) | 4,528,581) | 1,340,312) | 1,290,232) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 5.30 | 4.59 | 1.77 | 2.54 | 3.24 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Accenture PLC | — | — | — | — | — | |
| Adobe Inc. | — | — | — | — | — | |
| Cadence Design Systems Inc. | — | — | — | — | — | |
| CrowdStrike Holdings Inc. | — | — | — | — | — | |
| Datadog Inc. | — | — | — | — | — | |
| Fair Isaac Corp. | — | — | — | — | — | |
| 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-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
1 2016 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 6,820,394 ÷ 1,287,424 = 5.30
2 Click competitor name to see calculations.
- Total cash assets
- The total cash assets demonstrated significant fluctuations over the five-year period. Beginning at approximately 4.18 billion US dollars in 2012, the amount declined to around 3.41 billion in 2013. This was followed by a substantial increase to nearly 8 billion in 2014. Subsequently, the cash assets decreased to approximately 5.86 billion in 2015 but increased again to about 6.82 billion in 2016. Overall, despite volatility, there is a general upward trend when comparing the start and end values.
- Current liabilities
- Current liabilities showed relatively stable values in 2012, 2013, 2015, and 2016, ranging from about 1.29 billion to 1.29 billion US dollars. However, there was a notable spike in 2014 when current liabilities surged significantly to approximately 4.53 billion. This represents a sharp deviation from the otherwise consistent level observed in other years, suggesting a possible one-time event or significant obligation incurred during 2014.
- Cash ratio
- The cash ratio trend also shows considerable variation. Initially, the ratio was high at 3.24 in 2012, meaning cash assets were more than three times the current liabilities. This ratio decreased steadily to 2.54 in 2013 and further to 1.77 in 2014, reflecting the increase in liabilities and relative reduction in cash coverage in that year. In 2015, the ratio spiked to 4.59, followed by an additional increase to 5.3 in 2016, implying a strong liquidity position during these latter years. This pattern suggests improved cash reserves relative to short-term obligations after 2014's spike in liabilities.