Deckers Outdoor Corp. (NYSE:DECK)

Current Ratio

The current ratio shows a general declining trend from the fiscal year ending March 31, 2018, through March 31, 2022, decreasing from 4.81 to 3.23. This indicates a gradual reduction in the company's short-term liquidity over this period. However, there is a notable rebound in the ratio in the fiscal year ending March 31, 2023, rising to 3.84, suggesting an improvement in the company's ability to cover its short-term liabilities with current assets.

Quick Ratio

The quick ratio remains relatively stable in the early years, with a slight increase from 3.03 in 2018 to 3.07 in 2019, followed by a gradual decline to 2.12 in 2022. This decrease indicates a reduction in liquid assets available to meet immediate liabilities without relying on inventory. The quick ratio improves to 2.58 in 2023, indicating a partial recovery in the company's liquidity position excluding inventory.

Cash Ratio

The cash ratio, reflecting the company's most liquid assets relative to current liabilities, exhibits a similar pattern to the other liquidity metrics. It starts comparatively high at 2.27 in 2018, peaks slightly at 2.35 in 2019, then declines steadily to a low of 1.56 in 2022. The ratio recovers somewhat to 1.97 in 2023, suggesting an increase in readily available cash or cash equivalents to cover short-term obligations.

Overall Liquidity Trends

Overall, the liquidity ratios exhibit a downward trend over five years, signaling a gradual tightening of the company's liquidity and a decrease in its buffer against short-term liabilities. The rebound in all three ratios in the latest fiscal year indicates an improvement in the liquidity position, which may be attributed to enhanced working capital management or changes in asset composition. Despite the decline, the ratios remain above 1.0 throughout the period, suggesting that the company maintained the capacity to meet its current liabilities with liquid assets.

The analysis of the financial data reveals a consistent upward trend in current assets over the six-year period, increasing from approximately $910.7 million in 2018 to about $1.91 billion in 2023. This indicates an expanding base of short-term resources available to the company.

Current liabilities have also increased over the same period, growing from around $189.2 million in 2018 to nearly $497.4 million in 2023. The growth in current liabilities, however, is at a slower rate than that of current assets, particularly noticeable in the last two years where liabilities declined from $541.7 million in 2022 to $497.4 million in 2023.

The current ratio, a measure of liquidity calculated as current assets divided by current liabilities, demonstrates a gradual decline from 4.81 in 2018 to a low of 3.23 in 2022, suggesting a decrease in liquidity. This decline indicates that while both assets and liabilities increased, liabilities grew at a faster pace relative to assets until 2022. However, in 2023, the current ratio improves to 3.84, reflecting a strengthening liquidity position due to the combined effect of increased current assets and reduced current liabilities.

Current Assets

Steady increase over six years, nearly doubling from 2018 to 2023.

Current Liabilities

Rising trend until 2022 followed by a decline in 2023.

Current Ratio

Downward trend until 2022 indicating decreasing liquidity, with improvement in 2023 highlighting better short-term financial stability.

Total Quick Assets

The total quick assets demonstrated a general upward trend over the observed periods. Starting at 573,674 thousand US dollars in 2018, the value increased steadily each year except for a slight decline in 2022. The highest recorded total quick assets were 1,305,079 thousand in 2021, followed by a decrease to 1,146,215 thousand in 2022, and a rebound to 1,283,306 thousand in 2023. This suggests a solid improvement in highly liquid assets available for covering immediate liabilities, despite some variability in the last two years.

Current Liabilities

Current liabilities showed a consistent increase from 189,166 thousand US dollars in 2018 to 541,684 thousand in 2022, indicating a rising short-term obligation. However, in 2023, there was a noticeable reduction to 497,380 thousand, which may reflect improved liability management or reduced short-term obligations. The overall upward trend until 2022 might have increased pressure on liquidity, although the slight decrease in 2023 could mitigate this effect.

Quick Ratio

The quick ratio started at a robust 3.03 in 2018 and remained relatively stable up to 2019, reaching 3.07. It experienced a decline to 2.77 in 2020 and maintained a similar level in 2021 at 2.79. A sharper decline occurred in 2022, dropping the ratio to 2.12, suggesting a decrease in liquidity relative to current liabilities. In 2023, the quick ratio recovered somewhat to 2.58, indicating a partial restoration of liquid asset coverage against current liabilities. Despite fluctuations, the ratio remained above 2.0 throughout, signaling a generally strong liquidity position.

Overall Insights

The data indicates that while total quick assets and current liabilities both increased significantly over the six-year period, liquidity ratios suggest the company maintained an adequate hedge against short-term obligations. The decline in the quick ratio in 2022, alongside a rise in current liabilities, points to a temporary strain on liquidity, which improved in 2023. The trends suggest effective management of liquid resources relative to rising obligations, with attention required to sustain liquidity levels amid fluctuating liabilities.

Total Cash Assets

The total cash assets exhibit an overall upward trend from 2018 to 2023. Starting at $429,970 thousand in 2018, cash assets increased steadily each year, reaching a peak of $1,089,361 thousand in 2021. After a decline to $843,527 thousand in 2022, there was a recovery to $981,795 thousand in 2023. This pattern indicates a generally strong liquidity position with some volatility in 2022.

Current Liabilities

Current liabilities showed a consistent increase from 2018 through 2022, rising from $189,166 thousand to $541,684 thousand. In 2023, there was a reduction to $497,380 thousand. The pattern suggests growing short-term obligations over most of the period, followed by a moderate decrease in the latest year.

Cash Ratio

The cash ratio, which measures liquidity by comparing cash assets to current liabilities, remained above 2.0 from 2018 to 2021, indicating strong liquidity and an ability to cover current liabilities with cash alone. In 2022, the ratio declined substantially to 1.56, reflecting a notable reduction in liquidity relative to short-term obligations. In 2023, the ratio rebounded to 1.97, suggesting an improvement in liquidity but not yet reaching the highest levels observed earlier in the period.

Summary of Trends

Overall, the data reflects a company with a generally robust liquidity position characterized by increasing cash reserves and rising current liabilities, with a temporary dip in liquidity in 2022. The cash ratio’s decline in 2022 indicates a potential period of increased short-term financial pressure, but the subsequent recovery in 2023 suggests corrective measures or improved cash management. Monitoring the balance between cash assets and current liabilities remains essential for maintaining financial stability.