CNH Industrial N.V. (CNH)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 4,322,000 | 4,376,000 | 5,044,000 | 8,785,000 | 4,875,000 |
| Short-term investments | US$ in thousands | 136,000 | 105,000 | 254,000 | 392,000 | 0 |
| Total current liabilities | US$ in thousands | 24,000 | 16,000 | 367,000 | 389,000 | 319,000 |
| Cash ratio | 185.75 | 280.06 | 14.44 | 23.59 | 15.28 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($4,322,000K
+ $136,000K)
÷ $24,000K
= 185.75
The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. A higher cash ratio indicates a stronger liquidity position.
Looking at CNH Industrial N.V.'s cash ratio over the past five years, there has been significant variability. In 2023, the cash ratio was 185.75, showing a substantial increase from the previous year's 280.06. This suggests that the company had a very high level of cash and cash equivalents compared to its current liabilities at the end of 2023.
In contrast, the cash ratio was notably lower in 2021 at 14.44, indicating a weaker liquidity position at that time. However, there was an improvement in 2022 and a further increase in 2023, which reflects a positive trend in the company's ability to cover its short-term obligations with cash on hand.
It is important to note that while a high cash ratio demonstrates good liquidity, excessively high levels of cash relative to the company's operational needs may indicate that the company is not efficiently deploying its resources. Therefore, a balance between liquidity and investment in growth opportunities is essential for sustainable financial performance.
Peer comparison
Dec 31, 2023