Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
e.l.f. Beauty, Inc., liquidity ratios
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Current ratio | 1.59 | 2.81 | 2.97 | 2.32 | 2.59 | |
| Quick ratio | 0.78 | 1.75 | 1.37 | 1.34 | 1.48 | |
| Cash ratio | 0.36 | 1.12 | 0.67 | 0.79 | 0.90 |
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
A comprehensive analysis of the liquidity position from 2020 to 2024 reveals a period of strong stability followed by a significant contraction in the most recent fiscal year. While the company maintained robust liquidity margins between 2020 and 2023, there is a pronounced downward shift across all key liquidity metrics as of March 31, 2024.
- Current Ratio
- The current ratio remained consistently high from 2020 through 2023, peaking at 2.97 in 2022, which indicated a substantial cushion of current assets over current liabilities. However, a sharp decline occurred by March 31, 2024, where the ratio fell to 1.59, representing the lowest level in the five-year period.
- Quick Ratio
- The quick ratio exhibited relative stability and an upward trend leading into 2023, reaching a high of 1.75. This suggested an ability to meet short-term obligations without relying on inventory sales. This trend reversed abruptly in 2024, with the ratio dropping to 0.78, signaling that quick assets are no longer sufficient to cover current liabilities on a one-to-one basis.
- Cash Ratio
- The cash ratio showed the highest degree of volatility, fluctuating from a low of 0.67 in 2022 to a peak of 1.12 in 2023. This peak indicated that cash and cash equivalents alone could cover all current liabilities. By March 31, 2024, this ratio declined steeply to 0.36, indicating a significant reduction in immediate cash liquidity relative to short-term debt.
The simultaneous decline in all three ratios during the 2024 fiscal year suggests a systemic shift in the company's liquidity structure. The widening gap between the current ratio and the quick ratio in previous years highlighted a reliance on inventory; however, the 2024 figures indicate a tighter liquidity position characterized by lower cash reserves and a reduced capacity to cover immediate obligations compared to historical performance.
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Current Ratio
e.l.f. Beauty, Inc., current ratio calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 477,077) | 303,325) | 193,029) | 170,144) | 132,360) | |
| Current liabilities | 299,115) | 107,976) | 65,017) | 73,331) | 51,123) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 1.59 | 2.81 | 2.97 | 2.32 | 2.59 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Procter & Gamble Co. | 0.73 | 0.63 | 0.65 | 0.70 | — | |
| Current Ratio, Industry | ||||||
| Consumer Staples | 0.85 | 0.84 | 0.87 | 0.93 | — | |
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= 477,077 ÷ 299,115 = 1.59
2 Click competitor name to see calculations.
An examination of the liquidity position from March 31, 2020, to March 31, 2024, reveals a period of significant expansion in both current assets and current liabilities. While the liquidity buffer remained robust for the majority of the period, a notable contraction in the current ratio occurred in the most recent fiscal year.
- Current Asset Growth
- Current assets demonstrated a consistent and aggressive upward trajectory over the five-year period. Starting at 132,360 thousand US dollars in 2020, these assets grew to 477,077 thousand US dollars by March 31, 2024. This steady increase indicates a substantial expansion in the company's short-term resource base.
- Current Liability Trends
- Current liabilities exhibited more volatility compared to assets. Following a period of moderate growth and a slight decrease in 2022, liabilities rose sharply from 107,976 thousand US dollars in 2023 to 299,115 thousand US dollars in 2024. This represents a significant increase in short-term obligations in the final year of the analyzed period.
- Current Ratio Interpretation
- The current ratio remained relatively stable and high between 2020 and 2023, fluctuating between 2.32 and 2.97, which suggests a strong capacity to cover short-term obligations. However, the ratio declined to 1.59 by March 31, 2024. This downward shift is the result of current liabilities growing at a disproportionately faster rate than current assets during the 2024 fiscal year, although the ratio remains above 1.0, indicating that the company still maintains sufficient liquidity to meet its immediate debts.
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Quick Ratio
e.l.f. Beauty, Inc., quick ratio calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 108,183) | 120,778) | 43,353) | 57,768) | 46,167) | |
| Accounts receivable, net | 123,797) | 67,928) | 45,567) | 40,185) | 29,721) | |
| Total quick assets | 231,980) | 188,706) | 88,920) | 97,953) | 75,888) | |
| Current liabilities | 299,115) | 107,976) | 65,017) | 73,331) | 51,123) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 0.78 | 1.75 | 1.37 | 1.34 | 1.48 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Procter & Gamble Co. | 0.46 | 0.38 | 0.37 | 0.45 | — | |
| Quick Ratio, Industry | ||||||
| Consumer Staples | 0.38 | 0.37 | 0.38 | 0.43 | — | |
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 231,980 ÷ 299,115 = 0.78
2 Click competitor name to see calculations.
The liquidity profile exhibits a period of stability and growth followed by a significant contraction in the most recent fiscal year. While liquid assets have increased consistently over the five-year period, a disproportionate surge in current liabilities in the final year has materially altered the short-term solvency position.
- Total Quick Assets
- A consistent upward trajectory is observed, with assets increasing from US$ 75.9 million in 2020 to US$ 232.0 million by 2024. A substantial acceleration in asset accumulation occurred between 2022 and 2023, where quick assets more than doubled, indicating a significant expansion of highly liquid resources.
- Current Liabilities
- Short-term obligations remained relatively stable between 2020 and 2023, ranging from US$ 51.1 million to US$ 108.0 million. However, a sharp increase is evident in 2024, with liabilities rising to US$ 299.1 million. This represents a nearly 176% increase compared to the previous year, significantly outpacing the growth of liquid assets.
- Quick Ratio
- The quick ratio maintained a strong position above 1.0 from 2020 through 2023, reaching a peak of 1.75 in March 2023, suggesting a robust capacity to cover immediate obligations without relying on inventory liquidation. This trend reversed sharply in 2024, with the ratio falling to 0.78. This decline indicates that the entity's liquid assets are no longer sufficient to cover its current liabilities on a one-to-one basis.
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Cash Ratio
e.l.f. Beauty, Inc., cash ratio calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 108,183) | 120,778) | 43,353) | 57,768) | 46,167) | |
| Total cash assets | 108,183) | 120,778) | 43,353) | 57,768) | 46,167) | |
| Current liabilities | 299,115) | 107,976) | 65,017) | 73,331) | 51,123) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.36 | 1.12 | 0.67 | 0.79 | 0.90 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Procter & Gamble Co. | 0.28 | 0.23 | 0.22 | 0.31 | — | |
| Cash Ratio, Industry | ||||||
| Consumer Staples | 0.23 | 0.22 | 0.23 | 0.30 | — | |
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 108,183 ÷ 299,115 = 0.36
2 Click competitor name to see calculations.
The cash liquidity position experienced significant volatility over the five-year period ending March 31, 2024. While cash reserves saw a substantial increase mid-period, a sharp rise in short-term obligations in the final year has significantly reduced the immediate ability to cover current liabilities using only cash assets.
- Cash Asset Trends
- Total cash assets exhibited a fluctuating growth pattern, starting at $46.2 million in 2020 and reaching a peak of $120.8 million in 2023. Despite a moderate decline to $108.2 million in 2024, the absolute cash position remains substantially higher than the levels maintained between 2020 and 2022.
- Current Liabilities Expansion
- Short-term obligations remained relatively contained between 2020 and 2023, moving from $51.1 million to $108.0 million. However, a dramatic increase occurred in the final period, with current liabilities surging to $299.1 million by March 31, 2024, representing a nearly 176% increase over the previous year.
- Cash Ratio Analysis
- The cash ratio showed a gradual decline from 0.90 in 2020 to 0.67 in 2022, followed by a sharp recovery to 1.12 in 2023, indicating a period where cash assets fully covered all current liabilities. This trend reversed abruptly in 2024, with the ratio falling to 0.36. This decline is primarily driven by the rapid escalation of current liabilities rather than a depletion of cash reserves, signaling a diminished immediate liquidity buffer.
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