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).
- Current Ratio
- The current ratio exhibits fluctuations over the five-year period. Starting at a notably high level of 9.03 in 2019, it increased slightly to 9.63 in 2020 before declining to 5.54 in 2021. Subsequently, the ratio improved to 7.25 in 2022 and then rose markedly to 11.76 in 2023. This pattern indicates variations in short-term liquidity management, with the most recent year reflecting a strong liquidity position.
- Quick Ratio
- The quick ratio mirrors the trend observed in the current ratio but at slightly lower values. It declined from 8.44 in 2019 to 8.37 in 2020, then fell more sharply to 4.62 in 2021. An improvement followed with a rise to 5.93 in 2022 and a more substantial increase to 10.61 in 2023. These changes suggest enhanced liquidity in terms of more readily available assets relative to current liabilities, particularly in 2023.
- Cash Ratio
- The cash ratio shows a similar trajectory as the other liquidity ratios but at even lower levels. It decreased from 8.14 in 2019 to 7.91 in 2020, then more significantly to 3.89 in 2021. Following this, the ratio increased moderately to 4.8 in 2022 and then almost doubled to 9.51 in 2023. This indicates a strong recovery and improvement in the cash and cash equivalents held relative to current liabilities, reflecting an increase in the most liquid assets by the latest reporting period.
- Overall Analysis
- All three liquidity ratios display a dip around 2021, suggesting a period where short-term liquidity weakened. However, from 2022 onwards, there is a consistent upward trend culminating in 2023, where liquidity positions across all measures reached their highest values within the observed timeframe. This overall pattern may reflect strategic changes in liquidity management or shifts in operational dynamics that enhanced the company's ability to meet short-term obligations with current and liquid assets.
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 | 1.72 | — | |
| Elevance Health Inc. | 1.44 | 1.40 | 1.47 | 1.55 | — | |
| Intuitive Surgical Inc. | 4.76 | 4.40 | 5.08 | 6.86 | — | |
| Medtronic PLC | 2.39 | 1.86 | 2.65 | 2.13 | — | |
| UnitedHealth Group Inc. | 0.79 | 0.77 | 0.79 | 0.74 | — | |
| Current Ratio, Sector | ||||||
| Health Care Equipment & Services | 1.15 | 1.13 | 1.22 | 1.19 | — | |
| Current Ratio, Industry | ||||||
| Health Care | 1.23 | 1.23 | 1.31 | 1.30 | — | |
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.
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 | 1.14 | — | |
| Elevance Health Inc. | 1.30 | 1.27 | 1.33 | 1.42 | — | |
| Intuitive Surgical Inc. | 3.83 | 3.56 | 4.34 | 5.96 | — | |
| Medtronic PLC | 1.54 | 1.30 | 1.91 | 1.50 | — | |
| UnitedHealth Group Inc. | 0.73 | 0.70 | 0.72 | 0.68 | — | |
| Quick Ratio, Sector | ||||||
| Health Care Equipment & Services | 0.97 | 0.95 | 1.04 | 1.01 | — | |
| Quick Ratio, Industry | ||||||
| Health Care | 0.90 | 0.93 | 1.00 | 0.99 | — | |
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 financial data indicates significant shifts in liquidity position over the analyzed periods. Quick assets display a consistent upward trend, rising from 202,726 thousand US dollars at the end of 2019 to 1,105,106 thousand US dollars by the end of 2023. This substantial increase suggests a strengthening in highly liquid assets available to meet short-term obligations.
Current liabilities also increased, but at a more moderate pace compared to quick assets. Starting at 24,008 thousand US dollars in 2019, liabilities grew to 104,205 thousand US dollars by 2023. While this represents an overall increase in obligations, the growth in quick assets outpaces the rise in current liabilities.
The quick ratio further corroborates the improved liquidity profile. It declined from 8.44 in 2019 to 4.62 in 2021, indicating a relative contraction in liquid assets against current liabilities during that period. However, this ratio rebounded thereafter, climbing to 5.93 in 2022 and sharply to 10.61 in 2023. The surge in the quick ratio in the most recent year reflects a significant enhancement in the company's ability to cover short-term liabilities with liquid assets, implying better short-term financial stability.
Overall, the data reveals a robust expansion in liquid resources and an improving liquidity position, which may enhance the company's operational flexibility and ability to address immediate financial commitments. The simultaneous increase in current liabilities suggests some growth in obligations, but the stronger rise in quick assets and the elevated quick ratio suggest that liquidity management remains effective.
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 | 0.60 | — | |
| Elevance Health Inc. | 0.87 | 0.86 | 0.95 | 1.04 | — | |
| Intuitive Surgical Inc. | 3.15 | 2.90 | 3.66 | 5.30 | — | |
| Medtronic PLC | 0.88 | 0.85 | 1.27 | 1.06 | — | |
| UnitedHealth Group Inc. | 0.34 | 0.36 | 0.36 | 0.33 | — | |
| Cash Ratio, Sector | ||||||
| Health Care Equipment & Services | 0.55 | 0.58 | 0.64 | 0.62 | — | |
| Cash Ratio, Industry | ||||||
| Health Care | 0.50 | 0.54 | 0.60 | 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.
The financial data over the five-year period reveals several notable trends in liquidity and short-term financial management.
- Total Cash Assets
- The total cash assets exhibit an overall increasing trend, starting from approximately $195 million in 2019 and rising significantly to nearly $991 million by the end of 2023. This represents a more than fivefold increase, with a particularly sharp rise observed between 2022 and 2023, indicating an enhanced cash position which could support further investment or act as a buffer in uncertain economic conditions.
- Current Liabilities
- Current liabilities have shown a general upward trend throughout the period, increasing from about $24 million in 2019 to over $104 million by 2023. The increase is pronounced especially between 2020 and 2021, and continues steadily thereafter. This suggests a growing obligation to meet short-term debts or payables, which may be linked to increased operational scale or financing activities.
- Cash Ratio
- The cash ratio, which measures liquidity by comparing cash assets directly to current liabilities, indicates a fluctuating but generally strong liquidity position. Beginning at a very high ratio of 8.14 in 2019, it remains robust through 2020 at 7.91 before dropping significantly to 3.89 in 2021. The ratio then shows recovery, rising to 4.8 in 2022 and surging to 9.51 in 2023, the highest in the observed period. This surge in 2023 reflects the substantial growth in cash assets relative to current liabilities and implies a strong ability to cover short-term obligations solely with cash.
Overall, the data suggests a company with increasing cash reserves and rising short-term liabilities, yet maintaining a highly liquid position throughout the period. The substantial increase in cash assets coupled with the maintained cash ratio above 3.89 highlights a conservative liquidity management strategy, ensuring ample cash coverage relative to current liabilities. The jump in 2023 particularly underscores a strategic accumulation of cash, potentially signaling preparation for future investments or cushioning against market uncertainties.