Garmin Ltd (GRMN)

Cash ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash and cash equivalents	US$ in thousands	2,079,470	1,693,450	1,279,190	1,498,060	1,458,440
Short-term investments	US$ in thousands	421,270	274,618	173,288	347,980	387,642
Total current liabilities	US$ in thousands	1,507,860	1,310,690	1,211,640	1,448,150	1,164,220
Cash ratio		1.66	1.50	1.20	1.27	1.59

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($2,079,470K + $421,270K) ÷ $1,507,860K
= 1.66

The cash ratio of Garmin Ltd, which measures the company's ability to cover its short-term liabilities with its cash and cash equivalents, has fluctuated over the years.

As of December 31, 2020, the cash ratio was 1.59, indicating that Garmin had $1.59 in cash and cash equivalents for every dollar of current liabilities. This suggests that the company had a comfortable level of liquidity to meet its short-term obligations.

However, by December 31, 2021, the cash ratio had decreased to 1.27, signaling a slight erosion in liquidity compared to the previous year. It is worth investigating the reasons behind this decrease and assessing the impact on the company's financial health.

Further decline was observed by December 31, 2022, with the cash ratio dropping to 1.20. This downward trend raises concerns about Garmin's ability to cover its short-term liabilities solely with its available cash reserves.

The trend reversed by December 31, 2023, when the cash ratio improved to 1.50. This increase indicates that Garmin had strengthened its liquidity position, which could be attributed to improved cash management practices or increased cash reserves.

By December 31, 2024, the cash ratio further improved to 1.66, suggesting that Garmin had a healthier liquidity position compared to the previous year. This higher cash ratio signifies the company's ability to meet its short-term obligations more comfortably with its cash resources.

Overall, while Garmin's cash ratio has exhibited fluctuations over the years, the recent improvements in liquidity indicate a positive trend in the company's ability to manage its short-term financial obligations effectively.