Freshpet Inc (FRPT)

Cash ratio

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash and cash equivalents US$ in thousands 268,633 296,871 132,735 72,788 67,247
Short-term investments US$ in thousands — — — — 27,894
Total current liabilities US$ in thousands 98,869 89,222 89,614 58,946 33,121
Cash ratio 2.72 3.33 1.48 1.23 2.87

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($268,633K + $—K) ÷ $98,869K
= 2.72

The cash ratio of Freshpet Inc. demonstrates notable fluctuations over the specified period from December 31, 2020, through December 31, 2024. At the end of 2020, the cash ratio stood at 2.87, indicating that the company's cash and cash equivalents were nearly three times its current liabilities, reflecting a robust liquidity position at that time.

By the end of 2021, the cash ratio declined sharply to 1.23, suggesting a reduction in cash holdings relative to current liabilities. Although still comfortably above 1, this decline indicates a tightening of liquidity, which could be attributed to increased operational activity, investments, or other uses of cash.

The ratio experienced a slight increase in 2022 to 1.48, signaling a moderate replenishment of cash reserves or a reduction in current liabilities relative to cash holdings. This improvement suggests a cautious strengthening of liquidity, although it remained below the 2020 peak.

In 2023, the cash ratio surged markedly to 3.33, marking the highest point in the observed period. This indicates a significant accumulation of cash and cash equivalents relative to current liabilities, possibly due to conservative cash management, improved cash flows, or reduced short-term liabilities. This level signifies a very comfortable liquidity position, with the company well-positioned to meet its short-term obligations solely through its cash holdings.

By the end of 2024, the cash ratio decreased slightly to 2.72. While still high and indicative of strong liquidity, this decline suggests a slight reduction in cash relative to current liabilities, potentially due to operational expenditures, strategic investments, or debt repayment activities.

Overall, the trend in Freshpet Inc.'s cash ratio reflects periods of liquidity tightening and subsequent strengthening, culminating in a notably high cash ratio in 2023. The year-over-year fluctuations highlight management's responsiveness to changing operational and financial conditions, maintaining a generally strong liquidity position throughout the period.