DT Midstream Inc (DTM)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 56,000 | 61,000 | 132,000 |
| Short-term investments | US$ in thousands | — | — | 1,691,000 |
| Total current liabilities | US$ in thousands | 434,000 | 614,000 | 177,000 |
| Cash ratio | 0.13 | 0.10 | 10.30 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($56,000K
+ $—K)
÷ $434,000K
= 0.13
The cash ratio is a liquidity ratio that measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. A higher cash ratio indicates a stronger ability to meet short-term obligations.
Analyzing DT Midstream Inc's cash ratio over the past four years, we observe fluctuations in the company's liquidity position. In 2020, the cash ratio was very low at 0.03, indicating a limited ability to cover short-term liabilities with cash alone. This suggests potential liquidity challenges during that period.
However, in 2021, the cash ratio substantially improved to 1.03, reflecting a significant increase in the company's cash reserves relative to its short-term obligations. This high cash ratio implies a strong liquidity position, indicating a more robust ability to meet immediate financial obligations using cash assets.
In the subsequent years, the cash ratio declined but remained above 0.1, which is generally considered as the minimum acceptable level for most companies. In 2023, the cash ratio stood at 0.24, indicating a moderate ability to cover short-term liabilities with cash on hand.
Overall, the trend in DT Midstream Inc's cash ratio shows variability in its liquidity position over the years, with significant improvements in 2021 but a slight decline in the following periods. Further analysis of the company's cash management practices and liquidity strategy may provide additional insights into its short-term financial health and ability to meet obligations.
Peer comparison
Dec 31, 2023