Allegion PLC (ALLE)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 468,100 | 288,000 | 397,900 | 480,400 | 355,300 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 1,079,700 | 703,600 | 601,200 | 521,500 | 507,000 |
| Cash ratio | 0.43 | 0.41 | 0.66 | 0.92 | 0.70 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($468,100K
+ $—K)
÷ $1,079,700K
= 0.43
The cash ratio of Allegion plc has shown a decreasing trend over the past five years, declining from 1.02 in 2020 to 0.47 in 2023. This indicates a decrease in the company's ability to cover its short-term liabilities with its available cash and cash equivalents.
A cash ratio of less than 1 suggests that Allegion plc may have difficulty meeting its short-term obligations solely with its cash on hand. While a lower cash ratio could indicate potential liquidity concerns, it is essential to consider other factors such as access to credit lines or marketable securities when evaluating the company's overall liquidity position.
It is crucial for Allegion plc to monitor its cash ratio closely and take appropriate measures to ensure that it maintains a healthy level of liquidity to meet its short-term financial obligations.