Ecolab Inc (ECL)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	919,500	598,600	359,900	1,260,200	118,800
Short-term investments	US$ in thousands	—	—	—	—	67,600
Total current liabilities	US$ in thousands	4,345,800	4,210,400	3,553,200	2,932,200	3,630,600
Cash ratio		0.21	0.14	0.10	0.43	0.05

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($919,500K + $—K) ÷ $4,345,800K
= 0.21

The cash ratio for Ecolab, Inc. has exhibited fluctuations over the past five years. In 2023, the cash ratio stands at 0.26, which indicates that the company had $0.26 in cash and cash equivalents for every $1 of current liabilities. This represents an improvement from the previous year, where the ratio was at 0.19.

Comparing it to 2021 and 2019, where the cash ratios were 0.16 and 0.11 respectively, we can see a positive trend of increasing liquidity over the years. However, it is notable that in 2020, the cash ratio spiked to 0.47, suggesting a significant increase in cash reserves relative to current liabilities in that particular year.

The cash ratio is an important indicator of a company's ability to meet its short-term obligations using its most liquid assets. While the recent improvement in the cash ratio is positive, it is essential to consider the reasons behind the fluctuations and whether the company's cash position aligns with its operational and financial requirements.