Frontdoor Inc (FTDR)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 325,000 | 292,000 | 262,000 | 597,000 | 428,000 |
| Short-term investments | US$ in thousands | — | 6,000 | — | — | 7,000 |
| Total current liabilities | US$ in thousands | 331,000 | 364,000 | 378,000 | 403,000 | 364,000 |
| Cash ratio | 0.98 | 0.82 | 0.69 | 1.48 | 1.20 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($325,000K
+ $—K)
÷ $331,000K
= 0.98
The cash ratio of Frontdoor Inc. has fluctuated over the past five years, indicating varying levels of liquidity. The ratio measures the company's ability to cover its short-term liabilities with cash and cash equivalents alone.
In 2023, the cash ratio stands at 1.08, indicating that the company had $1.08 in cash and cash equivalents for every $1 of current liabilities. This suggests a relatively healthy liquidity position compared to the previous year, where the ratio was 0.89.
The downward trend from 2020 to 2021 (1.54 to 0.76) raises concerns about the company's ability to meet short-term obligations with cash reserves alone. However, the ratio improved significantly in 2022 (0.89) and continued to strengthen in 2023.
Overall, while the 2023 cash ratio of 1.08 reflects improved liquidity compared to previous years, further analysis of the company's cash management practices and overall financial health is recommended to assess its sustainability and ability to weather potential short-term cash flow challenges.
Peer comparison
Dec 31, 2023