International Paper (IP)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 950,000 | 804,000 | 1,295,000 | 595,000 | 511,000 |
| Short-term investments | US$ in thousands | 163,000 | 804,000 | 245,000 | 4,850,000 | — |
| Total current liabilities | US$ in thousands | 3,959,000 | 5,000,000 | 4,144,000 | 8,284,000 | 8,646,000 |
| Cash ratio | 0.28 | 0.32 | 0.37 | 0.66 | 0.06 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($950,000K
+ $163,000K)
÷ $3,959,000K
= 0.28
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 suggests a stronger ability to pay off debts and meet financial obligations.
Analyzing the trend for International Paper Co.'s cash ratio over the past five years, we observe fluctuations. The cash ratio was 0.42 in 2023, indicating that the company had $0.42 in cash and cash equivalents for every $1 of current liabilities. This represents an improvement from the prior year's ratio of 0.28.
In 2021, the cash ratio decreased to 0.49 from 0.72 in 2020, indicating a reduction in the company's ability to cover short-term liabilities. However, this ratio was significantly higher compared to the ratio of 0.13 in 2019, reflecting an improvement in liquidity management.
Overall, International Paper Co.'s cash ratio has shown some volatility over the years, but the recent increase in the ratio from 2022 to 2023 suggests a positive trend in the company's ability to meet its short-term obligations with available cash.
Peer comparison
Dec 31, 2023