Albemarle Corp (ALB)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	889,900	1,499,140	439,272	746,724	613,110
Short-term investments	US$ in thousands	168,928	5,890	897,708	35	32
Total current liabilities	US$ in thousands	3,560,460	2,741,020	1,874,340	1,801,850	1,409,000
Cash ratio		0.30	0.55	0.71	0.41	0.44

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($889,900K + $168,928K) ÷ $3,560,460K
= 0.30

The cash ratio of Albemarle Corp. has shown fluctuations over the past five years. In 2023, the cash ratio declined to 0.34 from 0.61 in 2022, indicating a decrease in the company's ability to cover its short-term liabilities with its cash and cash equivalents alone. This may raise concerns about the company's liquidity position in the most recent year.

Comparing the 2023 ratio to earlier years, it is notably lower than the ratios of 0.45 in 2020 and 0.50 in 2019, suggesting a potential weakening of Albemarle's short-term liquidity over time. However, the ratio is higher than the 0.26 recorded in 2021, indicating some improvement in liquidity compared to that year.

It is important for investors and stakeholders to keep in mind that while a higher cash ratio generally indicates a stronger liquidity position, a very high cash ratio may also suggest that the company is not efficiently utilizing its cash resources. Evaluating the cash ratio in conjunction with other liquidity and efficiency ratios can provide a more comprehensive understanding of Albemarle Corp.'s financial health and cash management practices.