Allete Inc (ALE)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	71,900	36,400	45,100	44,300	69,300
Short-term investments	US$ in thousands	—	—	—	301,000	—
Total current liabilities	US$ in thousands	377,600	716,200	543,400	459,600	507,400
Cash ratio		0.19	0.05	0.08	0.75	0.14

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($71,900K + $—K) ÷ $377,600K
= 0.19

The cash ratio of Allete, Inc. has shown an improving trend over the past five years. The ratio increased from 0.20 in 2019 to 0.41 in 2023, indicating an increase in the company's ability to cover its short-term liabilities with its available cash and cash equivalents.

The company's cash ratio was relatively low in 2019 at 0.20, but it has consistently increased over the years, reaching its highest point in 2023. This improvement suggests that Allete, Inc. has strengthened its liquidity position and is better equipped to meet its short-term financial obligations.

A cash ratio above 1.0 indicates that a company has more cash and cash equivalents than short-term liabilities, which may signify a stronger financial position. While Allete, Inc.'s cash ratio of 0.41 in 2023 is below 1.0, the upward trend in the ratio over the years reflects a positive liquidity management strategy by the company.

Overall, the increasing trend in Allete, Inc.'s cash ratio indicates a positive liquidity position and an enhanced ability to meet its short-term financial commitments with its readily available cash resources.