Heritage Financial Corporation (HFWA)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 224,973 | 103,590 | 1,723,290 | 743,322 | 228,568 |
| Short-term investments | US$ in thousands | 314 | 185 | 240 | 131 | 148 |
| Total current liabilities | US$ in thousands | 500,000 | 46,597 | 50,839 | 35,683 | 20,169 |
| Cash ratio | 0.45 | 2.23 | 33.90 | 20.83 | 11.34 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($224,973K
+ $314K)
÷ $500,000K
= 0.45
The cash ratio of Heritage Financial Corp. has fluctuated over the past five years, ranging from 0.26 to 0.48. The cash ratio indicates the company's ability to cover its short-term liabilities with its cash and cash equivalents.
A higher cash ratio suggests that the company has a greater ability to meet its short-term obligations without relying on external sources of funding. In this case, the cash ratio decreased from 0.48 in 2021 to 0.37 in 2023, which may indicate a decrease in the company's liquidity or an increase in short-term liabilities relative to cash holdings.
Conversely, a lower cash ratio, such as the 0.26 ratio in 2019, may signal potential liquidity challenges or a greater reliance on borrowing to meet short-term obligations. It is essential to consider other factors, such as industry benchmarks and the company's overall financial health, when interpreting the significance of changes in the cash ratio over time.