Shockwave Medical Inc. (NASDAQ:SWAV)

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 Assets

The current assets exhibit a consistent upward trend over the five-year period. Starting at 216,697 thousand US dollars in 2019, the figure increased moderately to 246,300 thousand in 2020 and further to 285,902 thousand in 2021. A substantial jump occurred in 2022, with current assets rising to 459,263 thousand and a more pronounced surge in 2023, reaching 1,225,260 thousand. This growth trajectory indicates a strengthening liquidity position and possibly accumulation of cash, receivables, or inventory.

Current Liabilities

Current liabilities have also increased over the same period but at a much slower rate compared to current assets. Beginning at 24,008 thousand US dollars in 2019, liabilities grew slightly to 25,581 thousand in 2020, then nearly doubled to 51,628 thousand in 2021. Subsequent increases were more modest with 63,374 thousand in 2022 and 104,205 thousand in 2023. Although liabilities are rising, the pace remains controlled relative to assets.

Current Ratio

The current ratio, calculated as current assets divided by current liabilities, shows notable fluctuations but an overall robust liquidity profile. The ratio started very high at 9.03 in 2019, increased to 9.63 in 2020, then declined sharply to 5.54 in 2021. A recovery is evident with the ratio climbing to 7.25 in 2022 and reaching a peak of 11.76 in 2023. These values consistently exceed the conventional benchmark of 1, suggesting strong short-term financial health. The dip in 2021 could indicate a relative increase in liabilities or a slower growth in assets during that year, while the subsequent rebound points to improved asset liquidity or liability management.

Summary

Overall, the analysis indicates that the company has significantly improved its liquidity position over the five-year period, especially in the last two years. The sharp increases in current assets, outpacing the growth in current liabilities, have led to a strengthened current ratio, culminating in an exceptionally high ratio of 11.76 in 2023. This suggests ample short-term resources to cover obligations. The temporary dip in the current ratio during 2021 merits attention as it reflects a less favorable but still strong liquidity status. The upward trends in liquidity measures imply favorable working capital management and a potentially lower liquidity risk.

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.

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.