Apple Inc (AAPL)
Cash ratio
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 29,965,000 | 23,646,000 | 34,940,000 | 38,016,000 | 48,844,000 |
| Short-term investments | US$ in thousands | 31,590,000 | 24,658,000 | 27,699,000 | 52,927,000 | 51,713,000 |
| Total current liabilities | US$ in thousands | 145,308,000 | 153,982,000 | 125,481,000 | 105,392,000 | 105,718,000 |
| Cash ratio | 0.42 | 0.31 | 0.50 | 0.86 | 0.95 |
September 30, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($29,965,000K
+ $31,590,000K)
÷ $145,308,000K
= 0.42
The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. It is calculated by dividing the cash and cash equivalents by the current liabilities. A higher ratio indicates a better ability to cover short-term obligations.
Looking at Apple Inc's cash ratio over the past five years, we see a declining trend. In 2019, the cash ratio stood at a robust 1.07, indicating the company had more than enough cash to cover its short-term liabilities. However, this ratio has steadily declined over the years to 0.52 in 2023, signaling a reduction in Apple's ability to cover its short-term obligations solely with its cash and cash equivalents.
This decline in the cash ratio could be indicative of several factors. It could be a strategic decision by Apple to deploy its cash reserves for investments, acquisitions, or other growth opportunities. Alternatively, it could also suggest an increase in short-term liabilities outpacing the growth of cash and cash equivalents.
Given the nature of Apple's business, which includes heavy investment in research and development, manufacturing, and global operations, it is typical for the company to have fluctuations in its cash ratio. It's important to note that a declining cash ratio does not necessarily indicate financial distress, as Apple has consistently demonstrated strong cash flows and a healthy balance sheet. However, it does merit a closer look at the company's overall liquidity position and management of short-term obligations. It's important to consider other liquidity measures and overall financial performance to gain a comprehensive understanding of Apple's financial health.
Peer comparison
Sep 30, 2023