Digi International Inc (DGII)

Cash ratio

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Cash and cash equivalents	US$ in thousands	31,693	34,900	152,432	54,129	92,792
Short-term investments	US$ in thousands	—	—	—	—	—
Total current liabilities	US$ in thousands	85,978	96,507	58,941	61,230	44,458
Cash ratio		0.37	0.36	2.59	0.88	2.09

September 30, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($31,693K + $—K) ÷ $85,978K
= 0.37

The cash ratio of Digi International, Inc. has exhibited variability over the past five years. The ratio measures the company's ability to cover its short-term liabilities with its cash and cash equivalents. In 2023, the cash ratio stands at 0.42, indicating that the company had $0.42 in cash and cash equivalents for every dollar of current liabilities. This represents a slight increase from the previous year's ratio of 0.40.

The lower cash ratio in 2023 compared to 2022 may suggest a relatively tighter liquidity position, which could indicate a need for improved cash management or an increase in short-term liabilities. However, it's important to note that a higher cash ratio isn't always indicative of a better financial position as holding excessive cash can indicate an inefficient use of resources.

Furthermore, when comparing the current ratio to previous years, the notable decline from 2021's high of 2.70 to 2023's 0.42 indicates a significant change in the company's ability to cover short-term liabilities with cash. This suggests the need for a closer examination of the company's cash management and liquidity position to identify the root cause of the decrease and to assess the potential risks that may arise from the decline.