Appfolio Inc (APPF)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	49,509	70,769	57,847	140,263	15,813
Short-term investments	US$ in thousands	162,196	89,297	64,600	28,256	22,876
Total current liabilities	US$ in thousands	69,766	61,343	52,642	49,805	47,465
Cash ratio		3.03	2.61	2.33	3.38	0.82

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($49,509K + $162,196K) ÷ $69,766K
= 3.03

The cash ratio of Appfolio Inc has shown fluctuations over the past five years. The ratio increased from 0.82 in 2019 to 3.38 in 2020, indicating a significant improvement in the company's ability to cover its short-term liabilities with cash. However, the ratio decreased in the following years, reaching 2.33 in 2021, 2.61 in 2022, and 3.03 in 2023.

A higher cash ratio is generally preferred as it indicates a stronger liquidity position and ability to meet short-term obligations without relying on external sources of funding. Appfolio Inc's cash ratio, although fluctuating, has generally remained above 1.0, suggesting that the company has a sufficient amount of cash to cover its short-term liabilities in most years.

It is important to note that interpreting the cash ratio in isolation may not provide a complete picture of the company's overall financial health, and it should be analyzed alongside other financial ratios and metrics for a comprehensive assessment.