Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Shockwave Medical Inc., liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Current ratio | 11.76 | 7.25 | 5.54 | 9.63 | 9.03 | |
| Quick ratio | 10.61 | 5.93 | 4.62 | 8.37 | 8.44 | |
| Cash ratio | 9.51 | 4.80 | 3.89 | 7.91 | 8.14 |
Based on: 10-K (reporting date: 2023-12-31), 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).
An analysis of the liquidity profile between December 31, 2019, and December 31, 2023, reveals an exceptionally strong capacity to meet short-term obligations, characterized by substantial buffers across all measured metrics. While a period of contraction occurred in 2021, there has been a subsequent and aggressive recovery, leading to peak liquidity levels by the end of 2023.
- Current Ratio
- The current ratio exhibited volatility over the period, beginning at 9.03 in 2019 and reaching a high of 11.76 by 2023. A significant reduction was noted in 2021, where the ratio declined to 5.54, before trending upward over the following two fiscal years.
- Quick Ratio
- The quick ratio followed a trajectory nearly identical to the current ratio, moving from 8.44 in 2019 to 10.61 in 2023. The minimal variance between the current and quick ratios suggests that inventories do not constitute a significant portion of current assets, indicating that liquidity is not dependent on inventory liquidation.
- Cash Ratio
- The cash ratio remained remarkably high, concluding the period at 9.51 in 2023. The narrow margin between the cash ratio and the quick ratio demonstrates that the vast majority of liquid assets are held in cash or cash equivalents, reflecting an extremely conservative financial position with minimal reliance on accounts receivable for short-term solvency.
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Current Ratio
Shockwave Medical Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 1,225,260) | 459,263) | 285,902) | 246,300) | 216,697) | |
| Current liabilities | 104,205) | 63,374) | 51,628) | 25,581) | 24,008) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 11.76 | 7.25 | 5.54 | 9.63 | 9.03 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Abbott Laboratories | 1.64 | 1.63 | 1.85 | — | — | |
| Elevance Health Inc. | 1.44 | 1.40 | 1.47 | — | — | |
| Intuitive Surgical Inc. | 4.76 | 4.40 | 5.08 | — | — | |
| Medtronic PLC | 2.39 | 1.86 | 2.65 | — | — | |
| UnitedHealth Group Inc. | 0.79 | 0.77 | 0.79 | — | — | |
| Current Ratio, Sector | ||||||
| Health Care Equipment & Services | 1.15 | 1.13 | 1.22 | — | — | |
| Current Ratio, Industry | ||||||
| Health Care | 1.23 | 1.23 | 1.31 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= 1,225,260 ÷ 104,205 = 11.76
2 Click competitor name to see calculations.
The current ratio exhibited considerable fluctuation between 2019 and 2023. Initially strong, the ratio experienced a decline before recovering to levels exceeding the initial values. This suggests shifts in the company’s working capital management and short-term financial position over the analyzed period.
- Overall Trend
- The current ratio demonstrated an initial increase from 9.03 in 2019 to 9.63 in 2020, indicating improving liquidity. A subsequent decrease to 5.54 in 2021 signaled a potential weakening in the ability to cover short-term obligations with current assets. The ratio then rebounded to 7.25 in 2022 and further increased significantly to 11.76 in 2023, representing a substantial improvement in short-term liquidity.
- Year-over-Year Changes
- The largest year-over-year increase occurred between 2022 and 2023, with the current ratio rising by 4.51. This substantial increase is likely attributable to a disproportionately larger growth in current assets compared to current liabilities. The most significant decrease occurred between 2020 and 2021, falling by 4.09, suggesting a more rapid increase in current liabilities or a slower growth in current assets during that period.
- Magnitude and Interpretation
- Throughout the period, the current ratio remained above 1.0, indicating that current assets consistently exceeded current liabilities. Values above 2.0 are generally considered healthy, and the company exceeded this benchmark in all years except 2021. The high ratios observed, particularly in 2019, 2020, 2022 and 2023, suggest a comfortable margin of safety in meeting short-term obligations. However, excessively high ratios could also indicate inefficient utilization of current assets.
The substantial increase in the current ratio in 2023 warrants further investigation to determine the underlying drivers, such as a significant cash inflow or a change in working capital policies. The dip in 2021 should also be examined to understand the factors contributing to the temporary reduction in liquidity.
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Quick Ratio
Shockwave Medical Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 328,422) | 156,586) | 89,209) | 50,423) | 139,045) | |
| Short-term investments | 662,132) | 147,907) | 111,772) | 151,931) | 56,304) | |
| Accounts receivable, net | 114,552) | 71,366) | 37,435) | 11,689) | 7,377) | |
| Total quick assets | 1,105,106) | 375,859) | 238,416) | 214,043) | 202,726) | |
| Current liabilities | 104,205) | 63,374) | 51,628) | 25,581) | 24,008) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 10.61 | 5.93 | 4.62 | 8.37 | 8.44 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Abbott Laboratories | 1.00 | 1.06 | 1.28 | — | — | |
| Elevance Health Inc. | 1.30 | 1.27 | 1.33 | — | — | |
| Intuitive Surgical Inc. | 3.83 | 3.56 | 4.34 | — | — | |
| Medtronic PLC | 1.54 | 1.30 | 1.91 | — | — | |
| UnitedHealth Group Inc. | 0.73 | 0.70 | 0.72 | — | — | |
| Quick Ratio, Sector | ||||||
| Health Care Equipment & Services | 0.97 | 0.95 | 1.04 | — | — | |
| Quick Ratio, Industry | ||||||
| Health Care | 0.90 | 0.93 | 1.00 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 1,105,106 ÷ 104,205 = 10.61
2 Click competitor name to see calculations.
The liquidity position demonstrates an exceptionally strong capacity to meet short-term obligations using the most liquid assets. Over the five-year period from 2019 to 2023, a trajectory of expanding liquidity is observed, characterized by a substantial increase in quick assets that consistently outpaced the growth of current liabilities.
- Total Quick Assets Trend
- A significant upward trend is observed in total quick assets, which grew from US$ 202.7 million in 2019 to US$ 1.1 billion by the end of 2023. The most pronounced expansion occurred between 2022 and 2023, where assets increased by approximately 194%, indicating a massive accumulation of liquid resources.
- Current Liabilities Evolution
- Current liabilities exhibited steady growth over the analyzed period, increasing from US$ 24.0 million in 2019 to US$ 104.2 million in 2023. While liabilities increased more than fourfold, this growth was secondary to the acceleration of quick asset accumulation.
- Quick Ratio Analysis
- The quick ratio remained robust throughout the period, although it experienced a notable fluctuation. After remaining stable near 8.4 in 2019 and 2020, the ratio declined to 4.62 in 2021, driven by a sharp increase in current liabilities. A subsequent recovery occurred, culminating in a five-year peak of 10.61 in 2023, suggesting that the entity maintains a highly conservative liquidity buffer, holding over ten dollars of quick assets for every dollar of short-term debt.
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Cash Ratio
Shockwave Medical Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 328,422) | 156,586) | 89,209) | 50,423) | 139,045) | |
| Short-term investments | 662,132) | 147,907) | 111,772) | 151,931) | 56,304) | |
| Total cash assets | 990,554) | 304,493) | 200,981) | 202,354) | 195,349) | |
| Current liabilities | 104,205) | 63,374) | 51,628) | 25,581) | 24,008) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 9.51 | 4.80 | 3.89 | 7.91 | 8.14 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Abbott Laboratories | 0.53 | 0.66 | 0.78 | — | — | |
| Elevance Health Inc. | 0.87 | 0.86 | 0.95 | — | — | |
| Intuitive Surgical Inc. | 3.15 | 2.90 | 3.66 | — | — | |
| Medtronic PLC | 0.88 | 0.85 | 1.27 | — | — | |
| UnitedHealth Group Inc. | 0.34 | 0.36 | 0.36 | — | — | |
| Cash Ratio, Sector | ||||||
| Health Care Equipment & Services | 0.55 | 0.58 | 0.64 | — | — | |
| Cash Ratio, Industry | ||||||
| Health Care | 0.50 | 0.54 | 0.60 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 990,554 ÷ 104,205 = 9.51
2 Click competitor name to see calculations.
An examination of the liquidity position from 2019 to 2023 reveals a consistently strong capacity to cover short-term obligations using only cash assets. The cash ratio remained significantly above the standard benchmark of 1.0 throughout the entire period, indicating a high level of liquidity and a minimal risk of short-term insolvency.
- Total Cash Assets Evolution
- Cash holdings remained relatively stable between 2019 and 2021, fluctuating around US$ 200 million. A growth trajectory began in 2022, culminating in a substantial increase to US$ 990.55 million by December 31, 2023, representing a more than five-fold increase from 2019 levels.
- Current Liabilities Growth
- A consistent upward trend is observed in current liabilities, which increased from US$ 24.01 million in 2019 to US$ 104.21 million in 2023. The most significant relative increase occurred between 2020 and 2021, during which liabilities approximately doubled from US$ 25.58 million to US$ 51.63 million.
- Cash Ratio Dynamics
- The cash ratio experienced notable volatility, starting at 8.14 in 2019 and declining to a period low of 3.89 in 2021. This compression was primarily driven by the rapid increase in current liabilities while cash assets remained stagnant. However, a recovery began in 2022, followed by a surge to 9.51 by the end of 2023. This final peak is attributable to the massive expansion of total cash assets, which far outpaced the growth of short-term obligations during the final fiscal year.
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