American Water Works (AWK)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	330,000	85,000	116,000	547,000	60,000
Short-term investments	US$ in thousands	62,000	67,000	17,000	11,000	8,000
Total current liabilities	US$ in thousands	2,151,000	2,811,000	2,141,000	2,881,000	2,045,000
Cash ratio		0.18	0.05	0.06	0.19	0.03

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($330,000K + $62,000K) ÷ $2,151,000K
= 0.18

The cash ratio of American Water Works Co. Inc. has shown variability over the past five years. The ratio, which measures the company's ability to cover its current liabilities with the cash and cash equivalents on hand, has ranged from 0.09 to 0.28 during this period.

In 2023, the cash ratio stood at 0.28, indicating an improvement compared to the previous years. This suggests that the company had a higher level of cash and cash equivalents relative to its current liabilities at the end of the year, potentially enhancing its short-term liquidity position.

In 2022, the cash ratio was 0.18, showing a slight decrease from the previous year. Although the ratio declined, it remained above 0.10, indicating that the company still had a sufficient level of cash to cover its short-term obligations.

In 2021, the cash ratio was 0.13, which was the lowest among the five years analyzed. This suggests that the company may have had relatively lower cash reserves compared to its current liabilities, raising some concerns about its short-term liquidity position.

In 2020, the cash ratio was 0.23, showing an improvement from the previous year. This indicates that the company managed to increase its cash position relative to its current obligations, enhancing its liquidity position.

In 2019, the cash ratio was 0.09, which was the lowest ratio in the period analyzed. This suggests that the company may have faced challenges in maintaining sufficient cash reserves to cover its short-term liabilities during that year.

Overall, fluctuations in the cash ratio of American Water Works Co. Inc. over the past five years indicate varying levels of liquidity risk and cash management efficiency. It is important for the company to maintain an appropriate cash ratio to ensure it can meet its short-term obligations effectively.