Aramark Holdings (ARMK)

Cash ratio

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Cash and cash equivalents	US$ in thousands	1,927,090	329,452	532,591	2,509,190	246,643
Short-term investments	US$ in thousands	36,051	78,204	—	—	—
Total current liabilities	US$ in thousands	5,029,970	3,285,890	2,857,430	2,347,460	2,705,300
Cash ratio		0.39	0.12	0.19	1.07	0.09

September 30, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($1,927,090K + $36,051K) ÷ $5,029,970K
= 0.39

The cash ratio for Aramark Holdings has fluctuated over the past five years. In 2023, the cash ratio stood at 0.39, indicating that the company had $0.39 in liquid assets available to cover each $1 of current liabilities. This represents a significant improvement compared to the previous year's cash ratio of 0.12.

The cash ratio was relatively stable in 2021 at 0.19, before experiencing a sharp increase to 1.07 in 2020, suggesting a substantial increase in the company's liquidity position that year. However, in 2019, the cash ratio was notably low at 0.09, indicating a potential liquidity strain.

It is essential to note that a higher cash ratio is generally preferred as it indicates that a company has more cash and cash equivalents readily available to cover its short-term obligations. Conversely, a lower cash ratio may imply potential liquidity challenges. Overall, the trend in Aramark Holdings' cash ratio indicates varying levels of liquidity over the past five years.