FormFactor Inc (FORM)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	177,812	109,130	151,010	187,225	144,545
Short-term investments	US$ in thousands	150,507	129,006	125,055	67,810	76,327
Total current liabilities	US$ in thousands	131,095	149,667	148,754	154,571	136,560
Cash ratio		2.50	1.59	1.86	1.65	1.62

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($177,812K + $150,507K) ÷ $131,095K
= 2.50

The cash ratio measures the ability of a company to cover its short-term liabilities using only its cash and cash equivalents. A higher cash ratio indicates a stronger ability to meet short-term obligations.

Analyzing FormFactor Inc's cash ratio over the past five years, we observe a fluctuating trend. The cash ratio increased from 1.62 in 2019 to 1.65 in 2020, signifying a slight improvement in the company's liquidity position. However, there was a more notable increase in 2021, with the cash ratio rising to 1.86, indicating a more robust ability to cover short-term liabilities with cash on hand.

In 2022, the cash ratio slightly decreased to 1.59, suggesting a slight dip in liquidity compared to the previous year. However, in 2023, there was a significant improvement in the cash ratio to 2.50, indicating a substantial increase in the company's ability to meet short-term obligations solely from its cash reserves.

Overall, FormFactor Inc's cash ratio has displayed some volatility over the past five years, but the upward trend in recent years suggests an enhanced liquidity position and a stronger ability to handle short-term financial commitments.