Baxter International Inc (BAX)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 3,194,000 | 1,718,000 | 2,951,000 | 3,730,000 | 3,335,000 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 6,503,000 | 4,745,000 | 4,236,000 | 3,333,000 | 3,230,000 |
| Cash ratio | 0.49 | 0.36 | 0.70 | 1.12 | 1.03 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($3,194,000K
+ $—K)
÷ $6,503,000K
= 0.49
The cash ratio measures the ability of Baxter International Inc. to cover its short-term obligations using only its cash and cash equivalents. A higher cash ratio indicates a stronger liquidity position as it implies that the company has more readily available cash to meet its short-term liabilities.
From the data provided, Baxter International Inc.'s cash ratio has fluctuated over the last five years. In 2023, the cash ratio stands at 0.63, which indicates that for every dollar of current liabilities, the company has $0.63 in cash or cash equivalents. This represents a decrease from the prior year's ratio of 0.56.
The trend observed over the years reflects a potential decrease in the company's ability to meet short-term obligations solely with its available cash reserves. It is important to assess the reasons behind this trend and monitor the company's cash management strategies to ensure adequate liquidity for operations and financial stability.
Overall, the decreasing cash ratio of Baxter International Inc. suggests a potential need for the company to enhance its cash reserves or optimize its working capital management to improve liquidity in the short term.
Peer comparison
Dec 31, 2023