e.l.f. Beauty, Inc. (NYSE:ELF)

The financial data reveals distinct trends in liquidity ratios over the examined periods. The current ratio demonstrates a general decline from mid-2019 through early 2021, indicating a gradual reduction in short-term liquidity. Subsequently, a recovery phase is observed with the ratio rising significantly, peaking around mid-2022. However, this upward trend reverses sharply starting late 2023, with the current ratio dropping below earlier historical levels by mid-2024.

The quick ratio follows a somewhat similar pattern with some variances. Initially, it remains relatively stable with minor fluctuations, then declines more noticeably by late 2020. From early 2021 to mid-2022, the quick ratio exhibits improvement, suggesting enhanced ability to cover immediate liabilities without relying on inventory. Following this peak, a marked decrease is observed, particularly after late 2023, reaching its lowest points in mid-2024.

Analyzing the cash ratio, which measures the most liquid resources, there is a downward trend from mid-2019 through late 2020, implying a reduction in readily available cash resources relative to current liabilities. From early 2021 through mid-2022, the cash ratio increases, reflecting improved cash holdings or management. However, similar to the other ratios, a sharp decline manifests starting in late 2023, falling to historically low levels by mid-2024.

Current Ratio

Displayed a decline from approximately 3.1 to below 2.3 between mid-2019 and early 2021, indicating reduced liquidity. It then rose sharply to over 3.5 by mid-2022, followed by a steady decrease down to around 1.6 by mid-2024.

Quick Ratio

Remained around 1.7-1.9 in 2019, fell below 1.3 by late 2020, then improved to above 2.0 by mid-2022. Subsequently, it decreased significantly to below 0.9 by mid-2024.

Cash Ratio

Started near 1.3 in 2019 and declined to about 0.5 by the end of 2020. It recovered to over 1.1 during 2022, but then sharply dropped to around 0.35 by mid-2024.

Overall, all liquidity measures indicate a period of strong liquidity during 2019 followed by deterioration through 2020. Improvements occurred through 2021 and peaked in 2022, suggesting better liquidity management or increased current assets relative to liabilities. A significant contraction in liquidity ratios after late 2023 points to increasingly tighter short-term financial flexibility, which may warrant attention regarding working capital management and cash availability in the most recent periods.

The analysis of the quarterly financial data reveals several notable trends in both current assets and current liabilities, as well as their impact on the current ratio over the examined periods.

Current Assets

Current assets displayed a general upward trajectory from June 30, 2019, through June 30, 2024. Starting at approximately $141 million, the level fluctuated modestly during 2019 and early 2020, with a slight dip in the first quarter of 2020. From mid-2020 onward, current assets exhibited consistent growth, accelerating significantly after mid-2021. By June 2024, current assets had nearly quadrupled compared to their initial value, reaching over $530 million. This trend reflects a substantial increase in the company’s short-term resources or liquid assets over the five-year span.

Current Liabilities

Current liabilities showed a more volatile pattern with notable fluctuations throughout the period. Initially, the liabilities hovered around $46 to $61 million from June 2019 to early 2020, increasing somewhat steadily until mid-2021. However, starting from September 2023, current liabilities surged substantially, rising from approximately $152 million to nearly $300 million by mid-2024. This sharp increase in current liabilities in the latter period suggests growing short-term obligations or possibly increased borrowing or accounts payable.

Current Ratio

The current ratio, representing the company's ability to cover short-term liabilities with its current assets, reflects the interplay between the two components above. Initially high at over 3.0 in 2019, it dipped gradually below 2.5 by early 2021, indicating a reduction in short-term liquidity. The ratio then rebounded to consistently above 3.0 between mid-2021 and late 2022, driven by faster growth in current assets relative to liabilities. Nevertheless, from September 2023 onwards, the current ratio declined sharply to levels between 1.5 and 1.77 by mid-2024, coinciding with the marked increase in current liabilities. Although current assets remained substantial during this period, the proportional rise in liabilities compresses liquidity margins.

In summary, the data indicates that while the company significantly increased its current assets over the years, the recent escalation of current liabilities has exerted pressure on liquidity, as reflected in the current ratio’s decline to below optimal levels by mid-2024. This could have implications for short-term financial stability and warrants further examination of the nature of these liabilities and cash flow management.

The analysis of the quarterly financial data over the period from mid-2019 to mid-2024 reveals distinct trends in liquidity and current obligations.

Total Quick Assets

There is a clear overall upward trend in total quick assets, increasing from approximately 83.4 million USD in the second quarter of 2019 to about 264.7 million USD by the second quarter of 2024. Despite some volatility, especially during early 2020, the growth trajectory remains positive. Notable accelerations are visible from mid-2021 onwards, with figures reaching new highs each year, peaking in the first half of 2024.

Current Liabilities

Current liabilities show a significant increase over the same timeframe, rising from around 45.9 million USD in mid-2019 to nearly 300 million USD by mid-2024. The growth in liabilities is particularly pronounced from late 2022 to early 2024, where there is a large surge, nearly quadrupling from roughly 75 million USD to close to 300 million USD. This sharp increase indicates a substantial rise in short-term obligations, which may reflect expanded operations, increased financing, or other factors impacting the company’s immediate liabilities.

Quick Ratio

The quick ratio, which measures the ability to cover current liabilities with liquid assets, exhibits considerable fluctuation. It started strong above 1.8 in 2019, dipping below 1.5 during 2020, which coincides with the onset of the COVID-19 pandemic. The ratio recovered and fluctuated around 1.2 to 2.1 during 2021 and 2022, indicating relatively stable short-term liquidity during these periods.

However, from late 2022 through mid-2024, the quick ratio declines sharply, falling below 1.0 by the end of 2023 and remaining under 1.0 into mid-2024. This decline points to a deteriorating liquidity position, where current liabilities substantially exceed quick assets, highlighting potential short-term financial pressure.

In summary, while total quick assets have generally increased over the analysis period, the more significant rise in current liabilities, especially recently, has led to weakening liquidity as reflected in the quick ratio. The sharp increase in liabilities and the concurrent decline in liquidity ratios in the latest quarters suggest increasing short-term financial risk that warrants detailed examination and possible mitigation.

The analysis of the quarterly financial data reveals several notable trends and fluctuations in liquidity and liabilities over the observed period.

Total Cash Assets

Total cash assets demonstrate a variable pattern with significant fluctuations. Initially, cash assets ranged between approximately 41,000 to 74,700 thousand US dollars from mid-2019 through early 2021. A sharp increase is evident starting in early 2022, peaking at around 167,763 thousand US dollars by Q3 2023. However, there is a considerable drop in the last two reported quarters, falling to about 72,705 and 108,183 thousand US dollars respectively. This volatility indicates periodic cash accumulation followed by major drawdowns in the most recent periods.

Current Liabilities

Current liabilities steadily increase over the timeframe, with some periods of accelerated growth. From approximately 46,000 thousand US dollars in mid-2019, liabilities rise moderately until early 2021, after which a marked increase is observed. By Q4 2023 and Q1 2024, current liabilities surge dramatically to around 303,000 thousand US dollars. This sharp escalation may signal increased short-term obligations or operational leverage during this period.

Cash Ratio

The cash ratio exhibits a downward trend overall, indicating decreasing coverage of current liabilities by cash equivalents. Starting above 1.3 in mid-2019, the ratio declines steadily to below 0.6 by late 2021, reflecting shrinking liquidity buffers relative to liabilities. Some recovery occurs in 2022 and early 2023, with ratios briefly rising above 1.0, implying improved liquidity positions. Nonetheless, the ratio falls sharply again in 2023 to a low near 0.24–0.36, demonstrating a significant weakening in cash liquidity relative to current liabilities towards the end of the period.

Overall, the data suggest that while cash assets have experienced periods of growth, current liabilities have increased at a faster and more consistent rate, adversely impacting the cash ratio. The recent quarters highlight potential liquidity pressures given the steep rise in liabilities combined with lower cash ratio levels, which may warrant attention for cash management and short-term financial stability.