F5 Networks Inc (FFIV)

Cash ratio

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Cash and cash equivalents	US$ in thousands	1,074,600	797,163	758,012	580,977	849,556
Short-term investments	US$ in thousands	0	6,160	126,554	329,630	360,333
Total current liabilities	US$ in thousands	1,489,650	1,472,780	1,839,950	1,391,530	1,288,280
Cash ratio		0.72	0.55	0.48	0.65	0.94

September 30, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($1,074,600K + $0K) ÷ $1,489,650K
= 0.72

The cash ratio of F5 Networks Inc has fluctuated over the past five years, ranging from 0.48 to 0.94. The cash ratio measures the company's ability to cover its short-term liabilities with its available cash and cash equivalents. A higher cash ratio indicates a stronger ability to pay off short-term obligations without relying on external sources of liquidity.

In 2020, the cash ratio was the highest at 0.94, suggesting that F5 Networks had a comfortable level of cash on hand relative to its short-term liabilities. However, the ratio decreased to 0.65 in 2021, indicating a decline in the company's liquidity position. The cash ratio further decreased to 0.48 in 2022, reflecting a potential liquidity challenge for the company.

In the following years, the cash ratio improved, reaching 0.55 in 2023 and 0.72 in 2024. These increases suggest that F5 Networks enhanced its liquidity position by either increasing its cash holdings or reducing its short-term liabilities.

It is important to note that while a higher cash ratio is generally favorable, an excessively high ratio may indicate that the company is holding excess cash that could be better utilized elsewhere, such as for investments or business expansion. Conversely, a low cash ratio may raise concerns about the company's ability to meet its short-term obligations promptly. Therefore, F5 Networks Inc should aim to maintain a reasonable cash ratio that strikes a balance between liquidity and efficient use of resources.