The AES Corporation (AES)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 1,426,000 | 1,374,000 | 943,000 | 1,089,000 | 1,029,000 |
| Short-term investments | US$ in thousands | 395,000 | 730,000 | 232,000 | 335,000 | 400,000 |
| Total current liabilities | US$ in thousands | 9,731,000 | 6,491,000 | 4,732,000 | 5,362,000 | 5,096,000 |
| Cash ratio | 0.19 | 0.32 | 0.25 | 0.27 | 0.28 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($1,426,000K
+ $395,000K)
÷ $9,731,000K
= 0.19
The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. A higher ratio indicates a stronger ability to meet short-term obligations without relying on external sources.
Over the past five years, AES Corp.'s cash ratio has fluctuated, ranging from 0.35 to 0.58. The trend shows some variability, with the ratio decreasing in 2023 compared to 2022. Despite the decline, the company still has a sufficient amount of cash to cover its short-term liabilities, as indicated by a cash ratio above 0.20, which is generally considered a healthy level.
It is important to assess the company's cash management practices and liquidity position in conjunction with other financial metrics to gain a comprehensive understanding of its financial health. Additionally, monitoring the trend of the cash ratio over time can provide insights into the company's liquidity management and financial stability.