International Business Machines (IBM)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 13,068,000 | 7,886,000 | 6,650,000 | 13,188,000 | 8,172,000 |
| Short-term investments | US$ in thousands | 373,000 | 852,000 | 600,000 | 600,000 | 696,000 |
| Total current liabilities | US$ in thousands | 34,122,000 | 31,505,000 | 33,619,000 | 39,869,000 | 37,701,000 |
| Cash ratio | 0.39 | 0.28 | 0.22 | 0.35 | 0.24 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($13,068,000K
+ $373,000K)
÷ $34,122,000K
= 0.39
The cash ratio of International Business Machines Corp. has been on an upward trend over the past five years, indicating an improving ability to cover its short-term liabilities with cash and cash equivalents. The ratio increased from 0.34 in 2019 to 0.68 in 2023, which suggests that the company has strengthened its liquidity position.
A higher cash ratio is generally considered favorable as it signifies a company's ability to meet its short-term obligations without relying on external sources of funding. IBM's increasing cash ratio reflects a more conservative approach to managing liquidity and indicates a reduced risk of financial distress in the short term.
It's important to note that while a rising cash ratio indicates improved short-term liquidity, it's also essential for a company to strike a balance between holding excess cash and deploying cash effectively for growth opportunities or shareholder returns. Overall, the trend in IBM's cash ratio points towards a more robust financial position and enhanced liquidity management.
Peer comparison
Dec 31, 2023