WW Grainger Inc (GWW)
Cash ratio
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 660,000 | 601,000 | 515,000 | 461,000 | 325,000 | 315,000 | 262,000 | 364,000 | 241,000 | 328,000 | 547,000 | 562,000 | 585,000 | 859,000 | 1,603,000 | 1,492,000 | 360,000 | 286,000 | 315,000 | 392,000 |
| Short-term investments | US$ in thousands | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 1,831,000 | 1,898,000 | 1,920,000 | 1,924,000 | 2,010,000 | 1,785,000 | 1,750,000 | 1,742,000 | 1,528,000 | 1,550,000 | 1,589,000 | 1,531,000 | 1,441,000 | 1,441,000 | 1,388,000 | 1,500,000 | 1,678,000 | 1,572,000 | 1,452,000 | 1,462,000 |
| Cash ratio | 0.36 | 0.32 | 0.27 | 0.24 | 0.16 | 0.18 | 0.15 | 0.21 | 0.16 | 0.21 | 0.34 | 0.37 | 0.41 | 0.60 | 1.15 | 0.99 | 0.21 | 0.18 | 0.22 | 0.27 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($660,000K
+ $—K)
÷ $1,831,000K
= 0.36
The cash ratio measures a company's ability to cover its short-term liabilities with its available cash and cash equivalents. A higher cash ratio indicates that a company has a stronger ability to meet its short-term obligations.
Looking at W.W. Grainger Inc.'s cash ratio over the past eight quarters, we can observe an upward trend, indicating an improvement in the company's liquidity position. The cash ratio has increased steadily from 0.29 in Q4 2022 to 0.45 in Q4 2023.
The company's cash ratio was relatively stable around the 0.2 to 0.3 range in Q1-Q3 2022 before showing a significant improvement in Q4 2022. The ratio continued to increase in 2023, with each quarter showing a higher ratio than the previous one.
The cash ratio exceeding 1 would signify that the company has more cash on hand than its short-term liabilities, which may indicate an inefficient use of resources. However, W.W. Grainger Inc.'s cash ratio has remained below 1, indicating a prudent approach to managing liquidity.
Overall, the increasing trend in the cash ratio demonstrates W.W. Grainger Inc.'s improving ability to meet its short-term obligations with its available cash and cash equivalents. This suggests a positive liquidity position for the company, which may enable it to navigate economic uncertainties and capitalize on strategic opportunities.