Dream Finders Homes Inc (DFH)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021
Cash and cash equivalents	US$ in thousands	494,145	364,531	227,227
Short-term investments	US$ in thousands	54,311	14,008	0
Total current liabilities	US$ in thousands	531,584	968,448	760,000
Cash ratio		1.03	0.39	0.30

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($494,145K + $54,311K) ÷ $531,584K
= 1.03

The cash ratio of Dream Finders Homes Inc has shown an improvement over the past three years. As of December 31, 2023, the cash ratio stood at 1.03, indicating that the company had $1.03 in cash and cash equivalents for every $1 of current liabilities. This represents a significant increase from the prior year's cash ratio of 0.39 in 2022 and 0.30 in 2021.

A cash ratio above 1.0 suggests that the company has sufficient liquid assets to cover its short-term liabilities. The upward trend in the cash ratio indicates that Dream Finders Homes Inc has strengthened its liquidity position over the years, which is a positive sign for its financial stability and ability to meet its short-term obligations.

It's important to note that while a high cash ratio may signal a strong liquidity position, excessively high levels of cash may also imply underutilized resources. Therefore, management should balance maintaining an adequate cash reserve with investing excess funds to generate returns for the business and its shareholders.