Twitter Inc. (NYSE:TWTR)

The liquidity ratios over the analyzed quarters demonstrate notable fluctuations with distinct phases of change. The Current Ratio initially exhibits high values, ranging from 9.6 to 11 between March 2017 and June 2018, indicating robust short-term liquidity during this period. However, there is a marked decline starting in September 2018, reaching a low around 4.33 to 4.69 throughout late 2018 and mid-2019. This dip suggests a decrease in current assets relative to current liabilities, indicating a potential tightening of liquidity. Subsequently, the Current Ratio recovers sharply by December 2019 to over 9 but then declines again in 2020 to approximately 4.4, before gradually increasing once more in 2021 and into mid-2022, ending at 7.15.

The Quick Ratio mirrors a similar pattern, maintaining strong liquidity above 9 in the earlier periods (2017 to mid-2018) before dropping to a range between 4.2 and 4.6 during late 2018 and 2019. This indicates that the most liquid assets excluding inventory also reduced relative to current liabilities during this timeframe. Recovery occurs by the end of 2019 as the ratio rises to around 9, with another decline in 2020 to near 4.36, followed by a steady increase through 2021 up to close to 7 by mid-2022. The parallel movements between the Current and Quick Ratios suggest consistent inventory management relative to other current assets.

The Cash Ratio follows the same trend but displays even more pronounced volatility. High values above 8 are observed during the initial quarters up to mid-2018, signifying substantial cash and cash equivalents relative to current liabilities. This ratio then falls sharply to levels just under 4 throughout late 2018 and 2019, reflecting a decrease in available liquid cash. There is a significant spike by the end of 2019, surpassing 10 in some quarters, indicating an influx or retention of cash reserves. Again, the ratio declines during 2020 to below 4 and then progressively rises through 2021 and into 2022, reaching about 6.02. This pattern points to fluctuating cash management strategies or seasonal effects impacting cash availability.

In summary, all three liquidity ratios reveal a cyclical pattern with periods of high liquidity followed by marked decreases and subsequent recoveries. The sharp declines beginning in late 2018 and recurring throughout 2020 suggest intervals of reduced liquidity, potentially reflecting operational or market challenges. The recoveries, especially notable at the end of 2019 and gradually through 2021, indicate improved short-term financial stability and cash positioning. Overall, despite volatility, the company maintains liquidity levels well above 1, indicating the ability to meet current liabilities with current assets consistently throughout the observed period.

The analysis of the quarterly financial data over multiple years reveals noteworthy trends in the company's liquidity, specifically focusing on current assets, current liabilities, and the current ratio.

Current Assets

Current assets demonstrate a generally upward trend from March 2017 through June 2021, increasing from approximately 4.7 billion US dollars to a peak near 9.9 billion US dollars. This indicates continuous accumulation or improvement in liquid assets and accounts receivable over the period. However, from June 2021 to June 2022, there is a noticeable decline in current assets, decreasing from about 9.7 billion to 7.3 billion US dollars, suggesting a possible drawdown of liquid assets or reduction in receivables.

Current Liabilities

Current liabilities show more volatility across the quarters. From March 2017 to June 2018, liabilities increase moderately, then spike significantly by September 2018, reaching a high point of over 1.5 billion US dollars. Following this surge, liabilities fluctuate, declining sharply at the end of 2019, then increasing again in 2020 to levels exceeding 1.9 billion US dollars by December 2020. In the period from March 2021 to June 2022, liabilities show a significant decrease, dropping from over 2.2 billion US dollars to just over 1 billion US dollars. This pattern reflects shifts in short-term obligations that could be attributed to changes in operational or financing activities.

Current Ratio

The current ratio, representing the ability to cover short-term liabilities with short-term assets, fluctuates significantly. Initial values are very high, around 9.6 to 11.0 in early periods, indicating strong liquidity. There is a steep decline in late 2018 to ratios around 4.4 to 4.7, reflecting a deterioration in immediate liquidity or relative increase in liabilities. Following this dip, the ratio returns to very high levels, peaking near 11.9 in early 2020, signifying improved liquidity conditions. Subsequently, the ratio declines again markedly through 2020 and 2021, reaching values near 4.1 to 4.3, before rebounding from March 2022 onward to approximately 7.2 by June 2022. These fluctuations suggest that while the company generally maintains a strong liquidity position, certain quarters experience a tighter liquidity environment, potentially due to increased liabilities or slower asset turnover.

In summary, the company exhibits a strong but volatile liquidity profile over the observed periods. Current assets trend upward overall but decline in the latest quarters, while current liabilities show significant variability with large spikes and declines. The current ratio highlights periods of both considerable liquidity strength and tightening, indicating fluctuations in short-term financial management and operational cycles.

The analysis of the quarterly financial data from the indicated periods reveals several noteworthy trends and shifts in the liquidity position of the company. The focus is on total quick assets, current liabilities, and the quick ratio, each providing insight into short-term financial stability.

Total Quick Assets

Total quick assets display an overall upward trend from March 2017 through June 2022, rising from approximately $4.44 billion to $7.09 billion. This growth is punctuated by periods of more rapid increase, particularly notable from March 2017 to December 2018, where assets increased by more than 50%, peaking near $7 billion by December 2018. A slight decline and fluctuation occur afterward, but total quick assets generally remain elevated, reaching a high in March 2021 at over $9.65 billion before gradually decreasing again towards mid-2022.

Current Liabilities

Current liabilities exhibit significant variability across quarters. Starting around $489 million in March 2017, liabilities increased steadily with a notable jump in mid-2018, peaking around $1.52 billion by December 2018. Subsequent quarters show fluctuation, with some quarters demonstrating sharp decreases (e.g., a decline in late 2019 and mid-2022) and others showing substantial increases, especially in early 2020 and early 2021 reaching peaks over $2 billion. Towards mid-2022, there is a clear downward trend bringing liabilities back below $1.02 billion.

Quick Ratio

The quick ratio, representing the liquidity measure of quick assets relative to current liabilities, mirrors the variability seen in its components. Initially, the ratio is very high, exceeding 9 in early 2017 and rising close to 10 by the third quarter of that year. A sharp reduction occurs during late 2018 to early 2019, with the ratio dropping to approximately 4.5, signaling relatively diminished liquidity compared to the prior period. There is recovery and even improvement in late 2019 through mid-2020 with the quick ratio peaking near 11.7. However, this improvement is not sustained, and from late 2020 through mid-2021, the ratio declines again to levels near 4. Several quarters following show fluctuations but generally remain between 4 and 7, ending with approximately 7 in mid-2022, indicating somewhat improved liquidity relative to earlier periods of decline.

In summary, the data reflect a company that has generally increased its quick assets over the long term, while current liabilities have shown greater volatility, affecting liquidity metrics. The fluctuations in the quick ratio highlight periods of both strengthening and weakening short-term financial position. The variations suggest active management of liquid resources and obligations, with liquidity pressures evident in certain periods, particularly during late 2018, early 2019, and parts of 2020 and 2021, followed by signs of stabilization and modest improvement into mid-2022.

The analysis of the quarterly financial data reveals several notable trends across the observed periods.

Total Cash Assets

Total cash assets demonstrate a general upward trend from March 31, 2017, peaking around mid-2021 before showing a decline towards mid-2022. Initial quarters exhibit steady increases, moving from approximately 3.9 million to over 6 million US$ thousands by early 2019. After some fluctuations, cash assets again climbed, reaching highs near 8.8 million by March 31, 2021. However, from that peak, there is a clear downward movement in the final quarters, ending with a total near 6.1 million by June 30, 2022. This suggests a growth phase in cash holdings followed by a period of reduction.

Current Liabilities

The current liabilities show significant variability, with some quarters displaying sharp increases. From a relatively stable range around 0.5 million US$ thousands in 2017, there is a notable spike during late 2018 and early 2019, reaching over 1.7 million. Following this peak, liabilities sharply decline in late 2019 to below 1 million but then surge again dramatically by late 2020 to above 1.9 million. Throughout 2021, these liabilities remain high but generally decrease by mid-2022 to approximately 1 million. This pattern indicates periods of increased short-term obligations, potentially correlated to company operations or financing activities, followed by partial deleveraging.

Cash Ratio

The cash ratio, which measures liquidity by comparing cash assets to current liabilities, fluctuates significantly. High ratios above 8 were recorded in most quarters of 2017 and early 2018, reflecting strong liquidity. However, starting in late 2018, the ratio drops steeply to around 4, coinciding with increased liabilities and temporarily lower cash assets. The ratio recovers to very high levels by mid-2020 (around 10.8) indicating exceptional short-term liquidity. Subsequently, from late 2020 through 2021, the ratio decreases to between 3.5 and 4.7, again reflecting a normalization but still solid liquidity position. By mid-2022, the ratio slightly improves to near 6, suggesting a positive liquidity trend despite lower total cash.

Overall, the data presents a company with initially strong liquidity ratios supported by rising cash assets and relatively moderate liabilities. The mid-term period shows volatility in liabilities, affecting liquidity ratios negatively. The company appears to manage recoveries in liquidity, reflected in cash ratio rebounds. The marked decline in cash assets and fluctuating liabilities near the end of the period warrants attention, as these may impact short-term financial flexibility.