Applied Materials Inc (AMAT)

Cash ratio

		Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019
Cash and cash equivalents	US$ in thousands	6,132,000	1,995,000	4,995,000	5,351,000	3,129,000
Short-term investments	US$ in thousands	737,000	586,000	464,000	387,000	489,000
Total current liabilities	US$ in thousands	7,372,000	7,379,000	6,344,000	4,459,000	4,447,000
Cash ratio		0.93	0.35	0.86	1.29	0.81

October 29, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($6,132,000K + $737,000K) ÷ $7,372,000K
= 0.93

The cash ratio for Applied Materials Inc. has fluctuated over the past five years, as shown in the table. The cash ratio indicates the company's ability to cover its short-term liabilities with its cash and cash equivalents. A higher cash ratio is generally preferable as it suggests a stronger ability to meet short-term obligations.

In 2023, the cash ratio improved significantly to 1.12, indicating that Applied Materials had a sufficient level of cash and cash equivalents to cover its short-term liabilities. This increase from the previous year suggests an enhanced liquidity position and improved ability to meet financial obligations.

In 2022, the cash ratio was relatively low at 0.53, which may raise concerns about the company's liquidity position. A lower cash ratio could indicate potential difficulties in meeting short-term obligations with the available cash and cash equivalents.

In 2021, the cash ratio improved to 1.08, signaling a better liquidity position compared to the previous year. This increase may reflect improved cash management or reduction in short-term liabilities.

In 2020, the company had a relatively high cash ratio of 1.46, indicating a strong ability to cover short-term obligations with available cash and cash equivalents. This suggests a healthy liquidity position for the company.

In 2019, the cash ratio was 0.94, showing a moderate ability to cover short-term liabilities with cash and cash equivalents.

Overall, the fluctuation in Applied Materials Inc.'s cash ratio over the years indicates varying levels of liquidity and the company's ability to meet its short-term obligations. The upward trend in the cash ratio from 2021 to 2023 suggests an improvement in liquidity management, while the substantial increase in 2023 is particularly noteworthy and reflects a stronger financial position in terms of short-term liquidity.