General Dynamics Corporation (GD)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 1,913,000 | 1,200,000 | 1,603,000 | 2,824,000 | 902,000 |
| Short-term investments | US$ in thousands | — | 42,000 | 62,000 | 58,000 | 0 |
| Total current liabilities | US$ in thousands | 16,432,000 | 15,341,000 | 13,978,000 | 15,964,000 | 16,801,000 |
| Cash ratio | 0.12 | 0.08 | 0.12 | 0.18 | 0.05 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($1,913,000K
+ $—K)
÷ $16,432,000K
= 0.12
The cash ratio measures a company's ability to pay off its current liabilities using only its cash and cash equivalents. A higher cash ratio suggests a stronger liquidity position and a better ability to cover short-term obligations.
In the case of General Dynamics Corp., the cash ratio has displayed fluctuations over the past five years. In 2023, the company's cash ratio stood at 0.25, indicating that it had $0.25 in cash and cash equivalents for every dollar of current liabilities. This represents an improvement from the previous year, where the ratio was 0.19.
Comparing 2023 to 2019, there has been a significant increase in the cash ratio from 0.12 to 0.25, reflecting a notable enhancement in the company's liquidity position over the period. However, it is important to note that the ideal cash ratio may vary across industries, and a cash ratio of 0.25 should be further evaluated in the context of General Dynamics' specific circumstances.
Overall, the upward trend in General Dynamics Corp.'s cash ratio indicates a more robust ability to meet its short-term financial obligations using cash resources, which can be viewed positively by investors and creditors assessing the company's liquidity risk.
Peer comparison
Dec 31, 2023