CarGurus (CARG)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 291,363 | 469,517 | 231,944 | 190,299 | 59,920 |
| Short-term investments | US$ in thousands | 20,724 | — | 90,000 | 100,000 | 111,692 |
| Total current liabilities | US$ in thousands | 115,178 | 98,733 | 170,709 | 66,536 | 73,758 |
| Cash ratio | 2.71 | 4.76 | 1.89 | 4.36 | 2.33 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($291,363K
+ $20,724K)
÷ $115,178K
= 2.71
The cash ratio of CarGurus Inc has fluctuated over the past five years, ranging from a low of 2.04 in 2021 to a high of 5.06 in 2022. The cash ratio measures the company's ability to cover its current liabilities with its cash and cash equivalents. A higher cash ratio indicates a stronger ability to cover short-term obligations with readily available cash.
In 2023, CarGurus Inc had a cash ratio of 3.02, which suggests that the company had $3.02 in cash and cash equivalents for every $1 of current liabilities. This ratio has decreased from the previous year, indicating a lower liquidity position compared to 2022. However, it is still higher than the ratios for 2021 and 2019, reflecting an improved liquidity position relative to those years.
It is important to note that while a high cash ratio signifies strong liquidity, excessively high levels of cash may also indicate underutilization of resources. Conversely, a low cash ratio could signal financial risk and an inability to meet short-term obligations. CarGurus Inc's varying cash ratios over the years highlight the importance of monitoring liquidity levels to ensure the company can maintain financial stability and meet its financial obligations.
Peer comparison
Dec 31, 2023