Genuine Parts Co (GPC)
Cash ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 479,991 | 1,102,010 | 653,463 | 714,701 | 990,166 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 8,525,380 | 7,827,110 | 7,686,110 | 6,581,580 | 5,894,080 |
| Cash ratio | 0.06 | 0.14 | 0.09 | 0.11 | 0.17 |
December 31, 2024 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($479,991K
+ $—K)
÷ $8,525,380K
= 0.06
The cash ratio is a financial metric that measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. Based on the data provided, Genuine Parts Co's cash ratio has shown fluctuations over the past five years.
As of December 31, 2020, the company had a cash ratio of 0.17, indicating that it had $0.17 in cash and cash equivalents for every $1 of short-term liabilities. This suggests a relatively strong liquidity position at that time.
However, the cash ratio decreased to 0.11 by December 31, 2021, and further declined to 0.09 by December 31, 2022. These decreases signal a decrease in the company's ability to cover its short-term obligations solely with its cash holdings.
There was a slight improvement in the cash ratio to 0.14 by December 31, 2023, but it then dropped significantly to 0.06 by December 31, 2024. This sharp decrease indicates a potential strain on Genuine Parts Co's liquidity position, as the company may have limited cash reserves to meet its short-term liabilities at that point in time.
Overall, the downward trend in Genuine Parts Co's cash ratio over the five-year period raises concerns about the company's short-term liquidity management. It may be advisable for the company to closely monitor its cash position and explore strategies to enhance its liquidity in order to meet its short-term obligations effectively.