FormFactor Inc (FORM)

Cash ratio

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash and cash equivalents US$ in thousands 190,728 177,812 106,126 151,010 187,225
Short-term investments US$ in thousands 169,295 150,507 132,005 125,055 67,810
Total current liabilities US$ in thousands 131,345 131,095 149,667 148,754 154,571
Cash ratio 2.74 2.50 1.59 1.86 1.65

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($190,728K + $169,295K) ÷ $131,345K
= 2.74

The cash ratio of FormFactor Inc has shown a consistent increase over the years, indicating a strengthening liquidity position. From 1.65 in December 2020, the ratio improved to 1.86 by December 2021, suggesting the company had $1.86 in cash and cash equivalents for every $1 of current liabilities. Although there was a slight decline in the ratio to 1.59 by December 2022, it rebounded significantly to 2.50 by December 2023 and further to 2.74 by December 2024.

This upward trend in the cash ratio signifies that FormFactor Inc has been effectively managing its liquidity by holding more cash reserves relative to its short-term obligations. A higher cash ratio is generally seen as a positive indication of a company's ability to meet its immediate financial obligations and withstand unexpected financial challenges. The company's increasing cash ratio over the years suggests a strengthening financial position and improved ability to handle potential cash flow needs.