Digi International Inc (DGII)

Cash ratio

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Cash and cash equivalents	US$ in thousands	27,510	31,693	34,900	152,432	54,129
Short-term investments	US$ in thousands	—	—	—	—	—
Total current liabilities	US$ in thousands	89,337	85,978	96,507	58,941	61,230
Cash ratio		0.31	0.37	0.36	2.59	0.88

September 30, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($27,510K + $—K) ÷ $89,337K
= 0.31

The cash ratio measures the proportion of a company's current assets held in cash or cash equivalents compared to its current liabilities. A higher cash ratio indicates better liquidity and the ability to cover short-term obligations more effectively.

Digi International Inc's cash ratio has fluctuated over the past five years. In 2024, the cash ratio decreased to 0.31 from 0.37 in 2023, indicating a lower proportion of cash and cash equivalents available to cover current liabilities. This may suggest a reduction in liquidity compared to the previous year.

Comparing the cash ratio to 2022, where it was 0.36, the 2024 ratio is slightly lower. However, it is notably lower than the exceptionally high ratio of 2.59 in 2021. The significant decrease from 2021 to 2024 indicates a substantial decrease in the ability to cover current liabilities with cash and cash equivalents.

When looking at 2020, where the cash ratio was 0.88, the downward trend in recent years is evident. This downward trend could potentially raise concerns about Digi International Inc's liquidity position and its ability to meet short-term obligations with available cash.

Overall, the decreasing trend observed in Digi International Inc's cash ratio over the past few years suggests a potential weakening liquidity position. It would be important for the company to closely monitor and manage its cash levels to ensure it can meet its short-term financial obligations effectively.