Inter Parfums Inc (IPAR)
Cash ratio
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Cash and cash equivalents | US$ in thousands | 125,433 | 88,462 | 104,713 | 159,613 | 169,681 |
Short-term investments | US$ in thousands | 109,311 | 94,304 | 150,833 | 160,014 | 126,627 |
Total current liabilities | US$ in thousands | 332,427 | 324,745 | 344,567 | 244,910 | 156,205 |
Cash ratio | 0.71 | 0.56 | 0.74 | 1.31 | 1.90 |
December 31, 2024 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($125,433K
+ $109,311K)
÷ $332,427K
= 0.71
The cash ratio, calculated as the ratio of cash and cash equivalents to current liabilities, provides insight into a company's ability to cover its short-term obligations using its cash reserves.
For Inter Parfums Inc, the cash ratio has shown a declining trend over the years:
- In December 31, 2020, the cash ratio stood at 1.90, indicating that the company had $1.90 in cash and cash equivalents for every dollar of current liabilities. This suggests a strong liquidity position.
- By December 31, 2021, the ratio decreased to 1.31, indicating some reduction in liquidity but still a healthy position.
- However, in December 31, 2022, the cash ratio dropped further to 0.74, which may raise concerns as the company now had only $0.74 in cash and cash equivalents to cover each dollar of current liabilities.
- The declining trend continued in the following years, with the ratio falling to 0.56 by December 31, 2023, and recovering slightly to 0.71 by December 31, 2024.
This trend suggests that Inter Parfums Inc's liquidity position has weakened over the years, as its cash reserves have not been keeping pace with its increasing current liabilities. It is recommended that the company closely monitors its liquidity position and explores strategies to improve its ability to meet short-term obligations without relying heavily on cash reserves.
Peer comparison
Dec 31, 2024