AutoNation Inc (AN)

Cash ratio

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Cash and cash equivalents	US$ in thousands	60,800	64,000	63,700	58,300	72,600	442,900	336,500	608,100	60,400	72,000	59,500	350,000	569,600	350,500	257,300	411,000	42,000	45,000	51,100	48,700
Short-term investments	US$ in thousands	22,800	—	—	—	15,400	—	—	—	2,200	—	—	—	101,900	288,500	290,500	—	—	—	—	—
Total current liabilities	US$ in thousands	5,582,500	4,531,800	4,407,000	3,780,800	3,405,700	2,935,400	2,780,000	2,804,600	3,059,800	2,427,200	3,040,700	3,609,200	4,165,900	3,710,600	3,821,300	4,995,800	5,100,200	5,195,000	5,590,300	5,898,500
Cash ratio		0.01	0.01	0.01	0.02	0.03	0.15	0.12	0.22	0.02	0.03	0.02	0.10	0.16	0.17	0.14	0.08	0.01	0.01	0.01	0.01

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($60,800K + $22,800K) ÷ $5,582,500K
= 0.01

The cash ratio measures a company's ability to cover its short-term liabilities using its cash and cash equivalents. A higher cash ratio indicates a stronger liquidity position.

Autonation Inc.'s cash ratio has shown a declining trend over the past eight quarters, decreasing from 0.29 in Q1 2022 to 0.04 in Q4 2023. This suggests a decrease in the company's ability to meet its short-term obligations solely from its cash reserves.

The most significant drop occurred between Q2 2022 and Q3 2022, where the cash ratio decreased from 0.19 to 0.20. From then on, the ratio has steadily decreased, reaching its lowest point in Q4 2023.

The low cash ratio may indicate that Autonation Inc. is becoming increasingly reliant on other sources of liquidity, such as accounts receivables or short-term borrowing, to meet its short-term obligations. This could potentially signal a risk if the company faces unexpected cash flow challenges in the future.

It would be advisable for Autonation Inc. to monitor and manage its cash flow effectively to improve its cash ratio and enhance its overall liquidity position.